Tax Refunds

As the Value-added Tax (VAT) set its presence to UAE, the nation and the businesses are gearing up to comply with all the VAT rules and procedures. Besides registration, returns and payments, VAT Tax refund in UAE is also an important aspect to be addressed. While local businesses will be eligible for the refunds, the tourists and visitors might not get the VAT refund initially. The situation may change in near future. Currently, the VAT refund is just classified for the local businesses in Dubai / UAE.

Impact of VAT Tax Refunds in Dubai / UAE

  • For standard rated products and services @ 5%

Businesses can claim a Tax refund in cases where the input Tax paid on purchases exceed the output Tax collected on the turnover.

  • For zero-rated products and services

If input Tax is paid by the business or individual on purchases who fall under the zero-rated products and services, VAT Tax refund comes into the picture. Zero-rated products and services consist of basic health services, educational services, goods and services outside GCC.

  • For exempted products and services

If input Tax is paid by the business or individual who falls under the exempted products and services, there is no entitlement to a VAT refund. The input Tax becomes a cost to the business and would require a revisit on the pricing mechanism.