A VAT return is a formal document that must be filled out by the Taxable Person and submitted to the Federal Tax Authority (“FTA”) on a regular basis. It includes all required information as well as a breakdown of any output tax owed and input tax that may be recouped.
The FTA portal should be used to file every VAT return. The Taxable Person or another person authorized to act on the Taxable Person’s behalf may file the return (for example, a Tax Agent or a Legal Representative).
By no later than the 28th day after the end of the tax period in question, or by such other date as may be specified by the FTA, the VAT Return must be received by the FTA.
VAT Payable: The remaining VAT must be paid to FTA if the output VAT amount is greater than the input VAT.
VAT Refundable: The surplus balance will be subject to VAT refund if output VAT is less than the amount of input VAT.
What is an application for a VAT refund?
A VAT return describing the VAT owed to the FTA for the tax period must be filed by each Taxable Person. The Taxable Person may ask for a VAT refund in the UAE after submitting the VAT return or at any subsequent time when they are due a credit if the input tax on a VAT return is more than the output tax.
In the UAE, who qualifies for a VAT refund?
Subject to Article 66 of the Executive Regulation, a UAE national who is a national of the UAE and holds a Family Book is entitled to request a special refund from the FTA for the VAT incurred on certain expenses related to the construction of a new residence when they own or acquire land in the UAE on which they build or commission the construction of their own residence.
How Should VAT Refund Be Handled Under UAE VAT?
Regarding how to handle the extra input VAT, also known as VAT refundable, the taxpayer has two options:
- The taxpayer will be able to request a refund of the VAT.
- If he chooses not to request a refund of the excess input VAT, the excess recoverable tax will be carried over to succeeding tax periods and may be applied to lower the amount of taxes and/or penalties that must be paid, or he may request a refund at a later date.
How does the process work?
- The FTA must receive a New Residence VAT Refund Request through the FTA e-Services website.
- The FTA will examine the application to determine whether the applicant is qualified to submit the claim, and if the initial assessment is positive, a reference number will be given. If additional documents or information are needed, the application may also be rejected.
- Additional paperwork will be required if the initial assessment is successful, either by the FTA or by a Verification Body (appointed and authorized by the FTA)
- The Verification Body will disclose the FTA of the results of verification after reviewing the application. The FTA will then inform the applicant if the refund claim is accepted, revised, or cancelled.
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