Article 75(5) of the UAE Federal Decree Law No (8) of 2017 on Value Added Tax (“Law”) and Cabinet Decision No. (26) of 2018 on the Refund of Value Added Tax Paid on Services Provided in Exhibitions and Conferences provide the legal basis for the refund scheme for Exhibition and Conference Services.
This Scheme of VAT Refund applies to the Licensed Supplier who are rendering Exhibition and Conference Service.
Exhibition and Conference Services is defined as
- To Grant the right to access, attend or participate in an Exhibition or Conference (or)
- To Grant the right to occupy space for the purposes of conducting an Exhibition or Conference
Exhibition means any event held, for no longer than 7 days, to display, show or present Goods or Services, in accordance with a permit issued from the competent government entity.
Conference means any formal meeting held, for no longer than 7 days, attended by people with a shared interest, in accordance with a permit issued from the competent government entity.
Mechanism of the refund:
The Supplier providing the Exhibition and Conference Services will charge (not collect) VAT at 5% in respect of the Services. The Supplier will claim the refund of VAT charged on the Services as long as the Supplier does not collect the VAT amount from the International Customer. therefore, in effect, passing the benefit of the refund to the International Customer by ensuring that UAE VAT is not a cost to the Customer.
The following conditions must be met for the supplier to be able to claim the refund from the FTA:
- The supply is of Exhibition and Conference Services – that is, either of the grant of the right to access, attend or participate in an Exhibition or Conference or the grant of the right to occupy space for the purposes of conducting an Exhibition or Conference.
- The recipient of the Exhibition and Conference Services does not have a Place of Establishment or a Fixed Establishment in the State.
- The recipient of the Exhibition and Conference Services is not registered for VAT or required to register for VAT in the UAE.
- The Supplier has obtained a written declaration from the recipient confirming that the recipient does not have a Place of Establishment or a Fixed Establishment in the UAE and is not registered or required to register for VAT in the UAE.
- The recipient of the Exhibition and Conference Services has not paid the amount of VAT to the Supplier.
- If the Service supplied by the Supplier is the grant of the right to occupy space for the purposes of conducting an Exhibition or Conference, then the Supplier must be registered with and licensed by the FTA. This license will be issued for a period of one year.
- If the Service supplied by the Supplier is the grant of the right to access, attend or participate in an Exhibition or Conference then the Supplier must request for a licence to be able to provide such rights for a specific Exhibition or Conference.
Further, the event permit must be issued for the event before being able to apply for the licence. This license will be valid for that event only.
Providing VAT refund on Services supplied to International Customers:
In order to claim Refund of VAT, the supplier while providing the Exhibition or Conference Service has to collect a declaration which states that the International Customer:
- does not have a Place of Establishment or a Fixed Establishment in the UAE; and
- is not registrant or required to register for VAT in the UAE.
After obtaining the Declaration and meeting other conditions. The supplier must:
- Retain the original declaration provided by the International Customer.
- Provide the International Customer with a tax invoice. The invoice should charge applicable VAT and refund the same amount (or less) stating that the supply falls under the special VAT refund scheme.
- Not collect VAT from the International Customer.
- Report the VAT charged in respect of the Services as output tax in the relevant Tax Return. In the same Tax Return, the Supplier should claim a VAT refund of the amount of VAT charged.
The parties should retain records of all of the documentation issued and received under the scheme for the period of five years from the end of the tax period in which the license expired.
Filing Returns by the Supplier to the FTA
Where a supply of Services falls under the scheme, VAT is still charged on the supply, but not collected from the customer. Therefore, the Supplier is still required to report the VAT collected in the Tax Return which relates to the date of supply of the Services.
The refund amount shall be equal or less than the VAT charged on the supply of the Services and should be claimed in the adjustment column for the relevant Emirate in Box 1 of the return.
This blog post is written by CA Rashid Ali, Tax Advisor at Flyingcolour Accounting & Tax Services. At Flyingcolour, we have a team of qualified professionals who can help you with all kind of UAE VAT refund queries. Feel free to call +971 4 4542366 today for a quality consultation or please send inquiry to info[at]flyingcolour[dot]com.