“Federal Taxation” sets out 4 conditions for the “refund” of foreign business

Media In 19-01-2019 / WAM
The Federal Tax Authority has set forth four basic conditions for the recovery of value added tax (VAT) by foreign businesses in a guide on “VAT refunds for foreign businesses” on the official website of the Commission.
, The first requirement is that foreign businesses should not have a permanent establishment or establishment in the State or in any of the GCC States that apply the value added tax, in full compliance with the provisions of the GCC Standard Value Added Tax Convention.
And the third must not be taxable in the UAE. Thirdly, it should be registered as an entity with the competent authority in the country in which it was established, and the fourth and final condition is to belong to a country that applies value added tax and can be refunded in similar cases to entities belonging to the UAE.
HE Khalid Ali Al Bustani, Director General of the Federal Tax Authority, said that the mechanism of refunding value added tax for foreign businesses is clear and transparent, stressing that it contributes to supporting economic activities in the areas in which the visiting business of the country participates. This reflects positively on many sectors including tourism, trade, Conferences and others, and the national economy in general.
He explained that this mechanism came in accordance with Federal Law No. 8 of 2017 regarding value added tax and the conditions and controls set out in the executive regulations of the decree-law which provides for the refund of the tax paid for any import or import carried out by any person who is not a resident of the State or One of the applicable countries in fulfillment of the necessary conditions.
His Excellency pointed out that the principle of reciprocity and return of tax for businesses residing in the countries where the value added tax is applied for visiting UAE businesses is reciprocated by refunding the tax for the visiting works of the UAE from those countries.
With regard to the procedures, the Authority explained that the redemption period for each request was one Gregorian year, indicating that, for example, redemption claims for 2018 claims could be submitted as of 1 April 2019. For subsequent years, As of March 1 of the year following the year of the claim; that is, for the tax period from January 1, 2019 to December 31, 2019, redemption requests will be accepted as of 1 March 2020.
She pointed out that the minimum amount for each VAT refund request that may be submitted by foreign businesses is AED 2,000 and may include one purchase transaction or multiple purchase transactions. The Authority stressed the need to keep the original tax invoices for purchases for which tax refunds will be filed and will be required to be attached upon submission of the application.
The Authority noted that under the mechanism, works residing in any of the GCC countries that are not considered to be applied may submit a request for VAT refunds incurred in the UAE under this system.
The Commission has identified three cases in which recovery is not possible, including the supply of foreign works in the State unless the recipient or recipient is obliged to calculate the tax in accordance with the reverse calculation mechanism and if the input tax in respect of any goods or services is excluded from lawful recovery and thus can not be recovered By the taxable in the State, and if the foreign business is a non-resident tourist company, it is not also available for recovery.