Since the year 2018, VAT in UAE has been collected from businesses at the rate of 5%. The businesses pay the output VAT on the sales that have been made but as the investment on the business leads to several expenses, input VAT is also paid in this regard.

What is a VAT refund?

If the output VAT exceeds the input VAT, the amount is considered as a tax liability. However, if the input VAT exceeds the output VAT, the amount can be claimed for a refund. The VAT refund application can be submitted to the FTA that then processes and approves (or rejects) the application within 20 business days.

Is there a definitive timeline to claim the VAT refund?

As per UAE VAT law, the VAT can be claimed for a refund in the first two tax periods since the VAT expenses have been filed in the VAT return. A VAT refund isn’t always claimed however as some businesses prefer to adjust their refundable amount either in penalties or in future sales.

Are all incurred VAT expenses reclaimable?

No, not all VAT expenses can be reclaimed. VAT expenses are often a result of taxable supplies, exempt supplies, and products or services that are for non-business purposes. VAT can only be claimed for a refund on the products and/or services that are taxable. However, making a distinction between taxable and general expenses can be an intricate task that can be time-consuming and energy-draining. Apportionment of input tax can be applied in such cases in which calculations are done with the help of the following information:

  • Net taxable supplies divided by total supplies
  • Multiplying the amount of input VAT with the percentage obtained from the above calculation
How can ACCBOOKS be of assistance in claiming a VAT refund for your business?

A business’s stability relies on its financial structure and decisions. Taking a risk in this matter can prove to be disastrous with meticulous yet complicated laws governing the UAE VAT. Hence, professionals like ACCBOOKS are here for you to lead you out of any complex situation that you might come across while working out your accounting and VAT needs.

With a team of highly organized and dedicated experts of UAE VAT, ACCBOOKS ensures the safety of your finances by the maintenance of comprehensive and systematic expense ledgers that are paramount for filing the VAT returns and refunds as missing any significant document or tax invoice could lead to hefty amounts of penalties by the FTA.

ACCBOOKS’ VAT consultants are equipped with tools and technologies that can assist in ensuring timely periodic filing of VAT returns in compliance with the UAE VAT laws and obligations to avoid late penalties, categorization of reclaimable supplies in accordance with the FTA’s guidelines, working out the amount of VAT refundable or payable as per input and output VAT filed in the VAT return, and claiming VAT refund or adjustments with proper application and all the relevant documents needed as per FTA’s regulations.

ACCBOOKS streamlines the accounting system of your business so that it caters to your needs without violating any UAE VAT law, securing your business’s finance from penalties as well as preserving your business’s reputation before FTA and your esteemed clientele. If you’re looking for VAT services and Accounting services Dubai, you’re at the right place.

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