Special VAT Refund Schemes in UAE
Under VAT in UAE, the Government has proposed various special refund schemes where certain specified persons are entitled to claim refund of VAT paid on purchases made in UAE, even if they are not taxable persons in UAE. In each of these schemes, certain conditions have been laid down, which need to be fulfilled by these persons in order to avail the refund of VAT. Let us understand the special refund schemes under VAT in UAE.
1.New residences constructed by UAE citizens
This is applicable to UAE nationals who own or acquire land in UAE, on which the person builds or commissions the construction of his/her own residence. Such UAE nationals will be entitled to claim refund of VAT paid on expenses of constructing the residence.
Few conditions to be fulfilled in order to be eligible for this scheme are:
- a.The claim should relate to a newly constructed building used solely as the residence of the person or the person’s family.
- b.The claim should be lodged within 6 months from the date of completion of the newly built. residence
Under the business VAT refund scheme, foreign businesses are allowed to claim refund of VAT paid on expenses incurred in UAE. Here, a foreign business is any business that is registered with a competent authority in the jurisdiction where it is established. Some conditions to be fulfilled in order to be eligible for this scheme are:
- a.The business should not be resident in a State which has implemented GCC VAT.
- b.The tax claimed should not relate to goods or services for which tax is not recoverable.
The business VAT refund scheme has been explained in detail in our article 'Business VAT refund scheme'.
This refund scheme is applicable to tourists visiting UAE, who are not resident in any of the GCC VAT implementing States. These tourists will be eligible to claim refund of VAT paid on purchases made while visiting UAE. Some conditions to be fulfilled in order to be eligible for this scheme are:
- a.The visitor should be intending to leave UAE within 90 days of the purchase.
- b.The visitor should not be a crew member on a flight or aircraft leaving a State which has implemented VAT (i.e. currently, Kingdom of Saudi Arabia).
The tourist refund scheme has been explained in detail in our article 'Tourist refund scheme'.
4.Foreign governments, diplomatic bodies and missions, and certain international organizations
This scheme is applicable to foreign governments, diplomatic bodies and missions and certain international organisations. Under this scheme, the tax incurred by such persons on purchases made from UAE will be refunded to them. Certain conditions to be fulfilled under this scheme are:
- a. The goods and services should be acquired exclusively for official use.
- b. The country in which the relevant foreign government, international organisation, diplomatic body or mission is established or has its official seat has a similar scheme and excludes similar entities from UAE of any tax.
Hence, the various refund schemes initiated by the UAE Government serve as an encouragement to the relevant persons to make purchases from UAE, without incurring VAT on such purchases.