The Federal Tax Authority has completed preparations to launch the “VAT refunds for business visitors scheme” from April 2.
Following a meeting of FTA Board of Directors chaired by Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai, the UAE Minister of Finance and FTA Chairman, the tax authority said foreign businesses can apply for a refund on taxes incurred on the import and export activities of people not residing in the UAE but based in countries that implement VAT refund schemes.
“The scheme aims to reciprocate the efforts made in countries that offer VAT refunds to visiting UAE businesses,” the FTA said in a statement.
To be eligible for the VAT refund, the first condition is that foreign businesses must not have a place of establishment or fixed establishment in the UAE or in any of the VAT-implementing GCC states.
Second, such foreign businesses must not be a taxable person in the UAE. Third, they must also be registered as an establishment with a competent authority in the jurisdiction in which they are established; and finally, they must be from a country that implements VAT and that equally provides VAT refunds to UAE businesses in similar circumstances.
“The Federal Tax Authority has developed comprehensive plans to encourage tax compliance, raise the registration rate among taxable businesses, and combat tax evasion,” Sheikh Hamdan said.
“The authority is also stepping up its efforts to businesses – who we consider to be strategic partners – fully comply with tax regulations and procedures with little to no effect on their activities. With that in mind, we regularly organise awareness and consultative meetings to help private-sector entities across all industries efficiently implement the tax system,” said Sheikh Hamdan.
He said the FTA is currently creating new campaigns, most notably ‘Your Tax Invoice: Your Right’, which was launched during the first quarter of 2019 to promote the use of Tax Invoices across all business operations. “This initiative is in conjunction with the Tax Clinic, which was launched in August 2018, and seeks to establish direct communication with businesses, continuing throughout all seven emirates to raise awareness and to flag obstacles that can be resolved immediately,” Sheikh Hamdan said.
The FTA said the level of tax compliance in the country has increased, with the number of registrants for VAT exceeding 300,000 registered businesses – tax groups and individuals. Meanwhile, the number of registrants for Excise Tax reached 719, and the number of approved Tax Agents increased to 316.
The FTA confirmed the success of the “VAT refund procedures for UAE nationals who are building new residences.” Many citizens benefiting from the simple and straightforward electronic procedure that enables them to claim refunds on the taxes incurred on the construction of their new villas and apartments. The FTA noted that 235 applications were approved, enabling citizens to recover a total of Dh9.76 million.
The board also approved the FTA’s plan to launch the second phase of the “Marking Tobacco and Tobacco Products Scheme,” which will be expanded to include all tobacco products, whether imported or locally produced and traded, including shisha.