The UAE introduced Value Added Tax (VAT) on January 1, 2018, at a standard rate of 5%. While most businesses collect and pay VAT on their taxable supplies, they are also eligible to reclaim VAT paid on their business-related expenses. Understanding the process of VAT refund claims is essential to ensure smooth cash flow and compliance with Federal Tax Authority (FTA) rules.
This blog provides a comprehensive guide for UAE-registered businesses on how to claim VAT refunds, eligibility requirements, timelines, and best practices.
Eligibility to Claim VAT Refunds
Any VAT-registered business in the UAE is eligible to claim a refund of excess input tax (VAT paid on purchases and expenses) when it exceeds output tax (VAT collected on sales).
Scenarios Where Refunds May Arise:
- High input tax due to capital purchases
- Exporters supplying zero-rated goods or services
- Startups incurring VAT on setup and development costs
- Periods of lower-than-usual sales
Step-by-Step Process to Claim VAT Refund
Step 1: File Your VAT Return
Businesses must file their VAT return through the FTA portal (https://eservices.tax.gov.ae). In Box 15 of the VAT201 form, the business has the option to request a refund or carry forward the excess input VAT.
Step 2: Submit the VAT Refund Form (VAT311)
If you opt to claim a refund, you must complete and submit the VAT Refund Request Form (VAT311) through the FTA e-Services portal. This form includes your TRN, tax period, amount requested, and reason for refund.
Step 3: Attach Supporting Documentation
Attach valid tax invoices and a summary of purchases and sales during the relevant tax period. These must match your VAT return records and be compliant with FTA requirements.
Step 4: Await FTA Review
The FTA reviews your application and may request additional documentation or clarification. If everything is in order, the refund will typically be processed within 20 business days.
Step 5: Refund Payment
Once approved, the refund amount will be transferred to the bank account linked with your FTA profile. Ensure your bank account is validated and matches your trade license details.
Important Notes
- VAT refunds can be claimed for each tax period independently.
- The refund must be requested within 5 years from the end of the relevant tax period.
- Incorrect or incomplete documentation may delay the refund process or lead to rejection.
Common Mistakes to Avoid
- Claiming VAT on ineligible expenses (e.g., personal use, entertainment beyond limits)
- Missing valid tax invoice details (TRN, VAT amount, invoice number)
- Failing to reconcile the refund with your accounting books
- Requesting refunds when not eligible, such as when under mandatory registration threshold
Special VAT Refund Schemes
In addition to the regular VAT refund process, the UAE FTA also provides specialized refund schemes:
- VAT Refund for Foreign Businesses
- VAT Refund for Exhibitions and Conferences
- VAT Refund for Tourists via designated retail outlets
- New Residences VAT Refund for UAE Nationals building their homes
How PEAK Business Consultancy Services Can Help
Navigating VAT refunds can be a daunting task, especially when managing large volumes of invoices or cross-border transactions. PEAK Business Consultancy Services specializes in providing comprehensive VAT support including:
- VAT return filing and documentation
- Refund claim preparation and submission
- FTA audit response and compliance reviews
- Training and internal controls for tax teams
Our consultants ensure your VAT refund claims are accurate, complete, and processed on time. Don’t leave your money on the table—get in touch with PEAK BCS today and streamline your VAT recovery process.
To speak to a tax advisor or schedule a consultation, visit www.peakbcs.com.
Conclusion
Claiming VAT refunds in the UAE is a legally backed right for eligible businesses, and when done correctly, it can significantly improve your cash flow. Make sure to understand the rules, file returns on time, and maintain proper documentation to avoid delays or rejections.
Whether you’re a small business, exporter, or investor, professional guidance from firms like PEAK Business Consultancy Services can make the difference between an approved and a rejected VAT refund.
