VAT refund procedure in the GCC Region: United Arab Emirates

published on 6 October 2022 | reading time approx. 2 minutes

As mentioned in Part I of our article series, these articles serve to inform our readers about VAT refund mechanisms in the GCC region. Analogous to Section 18 (9) of the German Value Added Tax Act, it is also possible for foreign companies in the GCC region to obtain a refund of VAT paid.

Part II is intended to present the VAT refund procedure of the United Arab Emirates.

From 1 January 2018, taxes were introduced in the UAE for the first time. As in most tax systems, the first step was the introduction of VAT. Since its introduction, the VAT rate has been 5 percent and for certain services the VAT rate is only 0 percent.

Foreign companies are entitled to apply for a refund of VAT under Article 67 of the GCC VAT Framework Law, provided that the taxable supplies were obtained within the scope of the company and from a GCC member state.

The application for VAT refund in the UAE, unlike in Bahrain, is completed and submitted online, via a separate account in the tax authority's portal.

An application can be submitted at annual intervals and must always be made from 1 March to 31 August of each year for the previous year. Only those foreign companies that cumulatively fulfil the following conditions are entitled to apply:

The applicant is not a UAE taxpayer and does not carry on business in the UAE;
The applicant is carrying on a business and is registered as an establishment with a competent authority in the country in which it is established;
Certificate of tax registration with the relevant tax authority;
If exempt or non-business activities are carried out in the country of establishment that do not qualify for full VAT deduction, a letter or other evidence from your tax authority showing the amount of VAT that can be claimed on the expenditure must be provided;
The amount of refund applied for must be at least AED 2,000.

If a company does not have a registered office or permanent establishment in the UAE and meets all the requirements, it can benefit from the VAT refund procedure, provided documents such as invoices, proof of payment, etc. are available.

Since the so-called "Electronic Services System" has not yet been introduced in the GCC region, services between GCC states are considered international trade until then, and member states are not yet considered member states for tax purposes.

Consequently, companies based in the GCC region that pay VAT in other Member States should also have their entitlement to a refund of VAT checked.

The refund applications are processed within 4 months of submission. We will be happy to assist you in checking whether you are entitled to a VAT refund and will submit the applications to the UAE tax authorities on your behalf.