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VAT refund situation occurs when input VAT amount is higher than output VAT amount it leads to VAT refund. Government of UAE 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 on fulfilment of certain conditions. Various schemes are discussed below.
New residences constructed by UAE citizens – Applicable to UAE nationals who own or acquire land in UAE, on which the person builds or starts 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 on fulfilling conditions that the claim should relate to a newly constructed building used solely as the residence of the person or the person’s family and the claim should be lodged within 6 months from the date of completion of the newly built residence.
Business visitors – Foreign businesses (business that is registered with a competent authority in the jurisdiction where it is established) are allowed to claim refund of VAT paid on expenses incurred in UAE. Businesses need to fulfil some conditions that the business should not be resident in a State which has implemented GCC VAT and the tax claimed should not relate to goods or services for which tax is not recoverable.
Tourist visitors – 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 on fulfilling conditions that the visitor should be intending to leave UAE within 90 days of the purchase and the visitor should not be a crew member on a flight or aircraft leaving a State which has implemented VAT in Dubai.
Foreign governments, diplomatic bodies and missions, and certain international organizations – The tax incurred by such persons on purchases made from UAE will be refunded to them on fulfilling conditions that the goods and services should be acquired exclusively for official use and 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.