Dubai has recently been introduced with Value Added Tax. Under the Federal Tax Authority, businesses that are having annual turnover more than AED 375,000 need to compulsorily register to VAT services in UAE and companies having yearly revenue within AED 187,500 and AED 375,000 have an option of registering. Consumers need to pay 5% on most goods and services, excluding the exempted services.
If the output VAT exceeds the input VAT, then the balance is paid to the FTA, whereas when the output VAT is lower than the input VAT, the tax amount is refundable. As a taxpayer you have two options to deal with higher input VAT or VAT refundable, in the following cases if:–
- You are eligible to claim refund of VAT If you are not willing to claim for refund, and then the excess recoverable VAT is passed forward to a subsequent period of the tax and shall be further used for payment of tax and penalties. Or, he can claim the refund later.
The Process to Claim Refund of VAT
When you are having surplus input VAT, you will be shown an option concerning VAT Return to request a refund.
Selecting the ‘yes’ box means you wish to request a refund for the amount of excess recoverable tax. And selecting ‘no’ box will carry your recoverable tax forward.
After VAT Return is submitted you need to fill the VAT refund application. For this purpose, you need to go through the following steps-
- Login to e-services in the FTA portal with the help of your credentials.
- Navigate the ‘VAT’ tab, and then go for the ‘VAT Refunds ‘ tab.
- Click on ‘VAT Refund Request’.
- Now you can access the refund form. Complete filling all the correct pieces of information. The auto-populated fields in the form include TRN, total amount of excess refundable tax (AED), and the amount you wish to have refunded (AED), remaining amount of eligible excess refundable tax, and late registration penalty amount (AED).
- The authorized signatory will be automatically provided. Tick the declaration. Click the ‘Submit’ button.
After submission of the claim, FTA reviews the application and process within 20 business days. Once the claim lodged is approved, the amount shall be refunded. All the notifications regarding approval or rejection will be sent to your email account. If in any case, the processing exceeds 20 days, the authority notifies the taxpayer about deadline extension. After successful refunding, you can check the amount from the ‘Transaction History’ section under the ‘My Payment’ tab in the FTA e-service portal.