Business involves tons of sales and purchases. And they are liable to pay input/output taxes on them in the form of VAT if they are registered under FTA. This means the registrant businesses have to file a VAT return by submitting the details of VAT paid during the tax period. And during the course of VAT return filing the business may be in a position to claim a VAT refund from the tax authority.
VAT Refunds: Introduction
VAT refund request is made by the taxpayers in UAE when they realise on filing their VAT return that the input tax, they have paid is greater than the output tax. Input VAT is the amount that is paid to the supplier towards purchases or expenses whereas output VAT is the amount that is collected on sales. In order to claim the difference between the two from Federal Tax Authority, one has to file the VAT refund request as VAT refunds are not granted automatically. The procedure has its own set of requirements and meeting them all to the FTA’s satisfaction is not as easy as the ABC. However, you can always outsource the filing of VAT refund requests to the experts in the field such as Adam Global.
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VAT Refunds: Eligibility Criteria
While submitting your VAT return on the FTA portal, you may find yourself in either of the two situations –
- VAT Refundable: Input Tax < Output Tax
- VAT Payable: Input Tax > Output Tax
If the input tax is lesser than the output tax, your business will be in the former position requiring you to pay the amount by which output tax exceeds the input tax. On the contrary, if the input VAT surpasses the output VAT, your business will be in the latter position enabling you to request the refund towards the balance after adjustments from FTA.
VAT Refunds: Alternatives
Claiming VAT refunds is not mandatory. No, we don’t mean that you let it go. In case you have the net amount due on the declared VAT return, you don’t have to necessarily go for the refund request option. You have other options too such as:
- You sure may claim the balance
- You can have the excess input VAT amount waived rather than claiming OR
- You may opt to have it left as a credit on your VAT account to be utilized to meet the future liabilities.
If you hope that your business would attract a future liability, offsetting the balance against the future payment due could be a great idea. However, you are free to proceed with the refund claim from the FTA as well. The formal request for a VAT refund must be made through the VAT refund application Form VAT311 available on the FTA portal. The process is stringent and requires trustworthy transactional evidence to meet the FTA’s criteria.
VAT Refund Filing: FTA’s Response Mechanism
VAT refund is claimed by taxpayers in UAE after filing their VAT return when they find that the input tax, they have paid is exceeding the output tax on a VAT return. A taxpayer has to wait for the FTA’s review and decisions on the refund request made for at least 20 business days. The taxpayer will be notified within this timeframe whether their VAT claim is approved or disapproved. If the process crosses the 20 days’ period, the FTA will let the taxpayer know about the extension of the deadline.
VAT Calculations: Errors
There are myriad rules and regulations in respect of VAT in the UAE, and it can be relatively simple for businesses to make honest VAT errors. No matter how simple the errors may seem, they can invite serious VAT penalties and business owners should do whatever they can to ensure they do not fall prey to these lures.
Structured to verify the credibility of your VAT returns, the FTA claims process requires valid supporting transactional VAT calculations to be submitted correctly in compliance with the legislation. It has to rate your supplies and any VAT recoveries on expenses meticulously. The type of your business will command the particular risk areas susceptible to VAT calculation mistakes. Despite everything, there are some examples to help your business as follows:
- Private expenses
- VAT at the mercy of blocked adjustments
- Non-taxable (or exempt) supplies and basis input VAT claims
- Errors in goods imported reverse charge claims
- Determination of export of goods and services
- Out-of-scope supplies considered
Adam Global: Your VAT Refund Filing Support in the UAE
VAT refund filing in Dubai, UAE is anything but easy! Do we need to mention why! Yes, you guessed it right – even a tiny error or little non-compliance can lead to a huge penalty. But to err is human but not professionals. So why not task a VAT specialist in UAE with your VAT refund filing and enjoy peace of mind with timely refunds. To ensure an error-free filing of VAT refunds and 100% VAT compliance, approach one of the best VAT consultants in UAE such as Adam Global (AG). Our qualified VAT advisors in Dubai, UAE are highly qualified to execute the UAE VAT return as well as refund filing process for businesses of all types and sizes. Be it advisory and support on VAT registration, VAT deregistration and VAT reconsideration or VAT training , AG provides a range of VAT-related services to help businesses steer clear of hefty penalties, stress and other VAT non-compliance consequences. Join us whether you want us to perform VAT activities on your behalf or you wish to make your employees VAT ready so, they are up to date with any updates in FTA rules and regulations and can efficiently file VAT returns and refund requests.
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