Everything About VAT Refund

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Any VAT registered business shall submit the summary of its taxable supplies on a quarterly basis to Federal Tax Authority. The submission of VAT Return will lead to one of the following below mentioned situation

VAT Payable:

This happens when the Output VAT ( VAT on taxable supplies ) is more than Input VAT ( VAT on taxable expenses). Here the registrant will have to pay VAT before the due date.

VAT Refundable:

This happens when the Output VAT ( VAT on taxable supplies ) is less than Input VAT ( VAT on taxable expenses ). This scenario mainly happens when the purchases or expenses have been incurred locally and supplies have been made outside UAE for which VAT is zero rated.

Here the registrant will have a refundable position. He can either keep it as a credit with FTA or adjust the payable portion in next VAT quarter.

FTA also has a provision which allows submitting Refund application “VAT FORM 311” and claiming the refundable position.

Submission of “VAT Form 311”

Supportive Documents

1. 1. A summary of taxable supplies and expenses which has been already submitted as VAT Return in the FTA Portal shall be submitted in a Refund Excel format
   2. Along with the excel template, copy of below mentioned shall also be attached separately
      • 5 highest tax invoices from Standard Rated Expenses (in term of values)
      • 5 highest official and commercial documents related to zero rated supplies (in term of values)
      • 5 highest tax invoices related to Sales and other and outputs (in term of values)
   3. Bank Account Validation Letter

A Bank Account validation letter / certificate must be provided to the FTA. This letter must be issued and stamped by your bank and should include below details of the Tax Registrant:

1. • Name (must be the same as the taxable person’s name as registered with the FTA)
   • Bank’s name
   • Bank’s Address, SWIFT/ BIC and the IBAN

All of the above shall be uploaded as an attachment to the refund application.

You may also give the International Bank Account of the registrant. In this case also, you will have to ensure that the name of the Bank Account must be the same as the taxable registrant name as registered with the FTA.

Timeframe for repayment

Upon submission of the “VAT Form 311” you can check the status of application in the VAT Refund Tab.

FTA will review the application within 20 working days. If any further details are required, FTA will request for Resubmission by adding a comment as required. FTA will also notify its decision to accept or reject the refund claim.

The FTA may also notify the applicant that it requires a longer period than (20) business days to consider the application where appropriate.

Upon approving the Refund Application, FTA will process the refund amount within 5 working days to the registrants Bank Account.

If bank is international and does not have a correspondent bank in the UAE, the refund payment may take more than 5 business days.
Kindly note that FTA will charge any transfer fees charged by the bank.

Notes

1. Kindly make sure that the Bank Account details have been submitted while applying for TRN. FTA will reject the Refund Form if the same is not submitted. In such case, the registrant will have to amend the VAT Application and give the Bank Account details and wait for its approval from FTA
2. The summary of taxable supplies shall be given in the revised excel template
3. While filing the summary of taxable expenses, the registrant shall provide summary for the respective period in which refund has been accrued. If the Refund applies to more than one period, then it is recommended to submit the summary in separate excel sheet

The blog post is written by Mr. Nadeem, Tax Advisor at Flyingcolour Accounting & Tax Services. At Flyingcolour, we can guide and help you with the VAT refund. If you have any query then feel free to call +971 4 4542366 today for a quality consultation or please send inquiry to info[at]flyingcolour[dot]com.

Please Note: This article was published on 9th September, 2020. The information provided in the article is based on the policies and rules applicable at the time of writing it. Talk to one of our consultants for any recent update or change.