How to Claim VAT Refund in UAE
The Federal Tax Authority (FTA) introduced Value Added Tax (VAT) in the UAE on 1st January 2018. Since then, the government has introduced several VAT refund schemes for UAE nationals, foreign businesses, and tourists. These refund options allow eligible applicants to reclaim VAT on specific expenses, ultimately reducing financial burdens.
This guide explains what a VAT refund is, who can apply, and the step-by-step process for each refund scheme in the UAE.
What is a VAT Refund in UAE?
A VAT refund allows you to get back the VAT you’ve already paid when your input tax (paid on purchases) is higher than your output tax (collected on sales).
For example:
- If you collected AED 5,000 VAT from sales (output tax) but paid AED 7,000 VAT on purchases (input tax), you have an excess of AED 2,000.
- This AED 2,000 can be refunded by the FTA.
Difference from VAT adjustments:
- Refund: Extra amount is paid back to you.
- Adjustment: Input tax is offset against output tax, and you pay the remaining balance.
VAT refunds in UAE benefit:
- Foreign businesses → avoid double taxation.
- UAE nationals → reduce construction costs for new homes.
- Tourists → enjoy tax-free shopping.
Types of VAT Refund Schemes in UAE
The UAE has three main refund schemes, depending on eligibility:
Scheme | Eligible Category | Purpose |
VAT Refund for Foreign Businesses | Non-UAE businesses | To recover VAT on UAE-related business expenses |
VAT Refund for UAE Nationals Building Residences | UAE Nationals | To ease home construction costs |
Tourist Tax Refund Scheme | Tourists | To encourage tax-free shopping |
VAT Refund for Foreign Businesses
Foreign businesses that don’t have a permanent setup in the UAE can recover VAT under the Foreign Business Refund Scheme.
Eligibility
- No fixed establishment or permanent place of business in the UAE.
- Not a UAE VAT-registered entity.
- Registered in the home country with a recognized tax authority.
- Minimum claim amount: AED 2,000.
- Claims allowed once every 12 months.
VAT Refund for UAE Nationals Building New Residences
UAE nationals constructing a new residential property can apply for VAT refunds on certain construction expenses.
Eligibility
- Applicant must be a UAE national.
- Claim applies to essential services and materials such as construction, plumbing, wiring, air conditioning, doors, windows, kitchen fittings, and sanitary units.
- Refund request must be submitted within 12 months from the earlier of:
- Date of property completion certificate.
- Date of occupation.
VAT Refund for Tourists in UAE
Tourists visiting the UAE can enjoy tax-free shopping under the Tourist Refund Scheme.
Eligibility
- Purchases must be from VAT-registered retailers participating in the refund scheme.
- Minimum purchase: AED 250.
- Goods must be validated before departure and exported within 90 days of purchase.
Why VAT Refund Matters
- For businesses → Reduces international trade costs.
- For UAE nationals → Supports housing affordability.
- For tourists → Makes UAE shopping more attractive.
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Topics
Common Questions
Frequently Asked Questions
VAT is a 5% consumption tax introduced in 2018 on most goods and services.
Foreign businesses, UAE nationals building residences, and tourists.
Business expenses, construction materials, and eligible tourist purchases.
Invoices, proof of identity, tax registration (for businesses), and purchase receipts
Generally, within 20 business days of FTA approval.
