Who is Eligible for VAT Refund in Dubai? A Detailed Breakdown

VAT refunds in Dubai offer financial benefits for businesses, tourists, and international entities that meet specific eligibility criteria. However, not everyone qualifies for a refund, and understanding these requirements is crucial to ensure a smooth and successful claim process. This guide provides a detailed breakdown of VAT refund eligibility in Dubai, covering businesses, tourists, and foreign entities, along with insights into the refund process and best practices.

Understanding VAT refunds in Dubai

Dubai follows a 5% VAT system, introduced in 2018, which applies to most goods and services. However, certain entities can reclaim VAT, ensuring they do not bear unnecessary tax burdens. There are three main categories of VAT refund eligibility:

• Businesses registered in Dubai reclaiming VAT on business expenses.

• Tourists reclaiming VAT on eligible purchases before leaving the UAE.

• Foreign businesses and international entities reclaiming VAT under reciprocal agreements.

1. VAT Refund Eligibility for Businesses in Dubai

Who Qualifies for a VAT Refund?

Businesses operating in Dubai that are registered under the UAE's Federal Tax Authority (FTA) can apply for VAT refunds under the following conditions: VAT-Registered Business – The company must have a valid Tax Registration Number (TRN) and be fully compliant with VAT regulations. VAT Paid on Business Expenses – VAT can only be refunded on purchases made for taxable business activities (e.g., procurement of goods, office rentals, professional services). Not Engaged in VAT-Exempt Activities – Businesses that deal primarily in VAT-exempt supplies (e.g., residential real estate leasing, certain financial services) are not eligible for VAT refunds. Valid Tax Invoices – Businesses must maintain official tax invoices for all VAT-paid expenses, including supplier VAT registration details. Foreign Businesses Operating in Dubai – If a foreign company does not have a permanent UAE presence, it may still qualify for VAT refunds under special rules (see international VAT refunds below).

Who Does Not Qualify for a VAT Refund?

Businesses that are not VAT registered in Dubai. Companies primarily engaged in exempt activities (e.g., financial services, residential leasing). Organizations that do not retain valid tax invoices or lack sufficient documentation.

VAT Refund Process for Businesses

Submit VAT Return – Before claiming a refund, businesses must file their VAT returns via the FTA e-Services portal. Access the VAT Refund Section – Log in to the FTA portal and navigate to the "VAT refunds" section. Complete the Refund Application – Fill in details about VAT-paid expenses and attach supporting invoices. Submit the Refund Request – Once reviewed, submit the claim for processing. FTA Review and Approval – The FTA verifies the claim and either approves or rejects the request. Receive Refund Payment – If approved, the refund amount is credited to the business’s registered bank account. Processing Time: Refunds are typically processed within 20 business days, but may take longer if additional verification is required.

2. VAT Refund Eligibility for Tourists in Dubai

Dubai is a major shopping and tourism destination, and tourists can reclaim VAT on eligible purchases made during their visit.

Who Qualifies for a Tourist VAT Refund?

Must Be a Non-UAE Resident – Tourists must not be UAE residents and should provide a valid passport. Purchases Made at Registered Retailers – Only stores participating in the Tourist VAT Refund Scheme can issue VAT refund invoices. Goods Must Be Taken Out of the UAE – The purchased items must be exported within 90 days of purchase. Minimum Purchase Requirement – The minimum spend to qualify for a refund is AED 250 per invoice.

Who Does Not Qualify for a Tourist VAT Refund?

UAE residents, even if they travel abroad. Tourists who lose or fail to validate their invoices before departure. Purchases from non-registered retailers (not part of the VAT refund scheme). Goods consumed within the UAE (e.g., hotel stays, restaurant bills).

Tourist VAT Refund Process

Shop at Registered Retailers – Ensure that the store participates in the VAT refund system before making a purchase. Request a Tax Invoice – Ask for an electronic tax-free invoice linked to your passport. Validate VAT Refund at the Airport – Before departing the UAE, visit the Planet Payment VAT refund kiosks at Dubai International Airport or designated exit points. Submit Refund Request – Scan your passport and invoices at self-service kiosks or with VAT refund officers. Receive Refund – Choose between cash or credit card refund (cash is available in limited amounts). Tourist Refund Amount: Tourists can reclaim 85% of the total VAT paid, with a small processing fee deducted.

3. VAT Refund Eligibility for Foreign Businesses and International Entities

Foreign businesses and certain government or diplomatic entities may be eligible for VAT refunds in Dubai.

Who Qualifies for an International VAT Refund?

Foreign Businesses Without a UAE Presence – Companies that are registered in a country with a reciprocal VAT refund agreement with the UAE. Diplomatic Missions and International Organizations – Some embassies, consulates, and international agencies qualify for VAT refunds under special agreements. Business-Related VAT Expenses – VAT paid on hotel accommodations, trade shows, conferences, and business-related expenses can be refunded.

Who Does Not Qualify for an International VAT Refund?

Foreign businesses with a registered UAE branch (as they must register for VAT and file locally). Countries without a reciprocal VAT refund agreement with the UAE. Entities that fail to provide valid tax invoices for expenses.

Foreign VAT Refund Process

1. Check Eligibility – Verify whether your country has a reciprocal VAT agreement with the UAE. 2. Prepare Documentation – Collect valid invoices and proof of business-related expenses. Submit VAT Refund Application – Apply via the FTA’s VAT refund portal for foreign businesses. 3. FTA Review & Processing – The UAE tax authority will verify and process the refund request. 4. Receive Payment – If approved, the refund is credited to the foreign business’s bank account. 5. Processing Time: International VAT refunds may take longer than local refunds, typically up to 6 months.

How Young and Right Can Help

Navigating VAT refunds in Dubai can be complex, but Young and Right simplifies the process. Our expert VAT advisory services ensure businesses, tourists, and foreign entities maximize their refunds efficiently while staying compliant with UAE tax laws.

1. VAT Refund Assistance for Businesses

Businesses in the UAE can benefit from VAT refunds, but compliance is crucial. Our specialized services ensure that businesses meet all requirements seamlessly. Compliance Review

• Assess VAT eligibility and compliance

• Ensure adherence to UAE tax laws and regulations

Documentation Support

• Guidance on required invoices and records

• Assistance in maintaining accurate financial documentation

End-to-End Filing

• Preparation and submission of VAT refund applications

• Liaison with tax authorities for smooth processing

2. VAT Refund Guidance for Tourists

Tourists visiting Dubai can claim VAT refunds on eligible purchases. We help simplify the process so they can enjoy hassle-free claims. Understanding Refund Eligibility

• Clarifying which purchases qualify for VAT refunds

• Explaining refund policies for different categories of goods

Simplifying Refund Claims

• Step-by-step guidance on how to claim VAT refunds at the airport or designated refund points

• Ensuring all necessary receipts and documents are in order

3. VAT Refund Services for Foreign Businesses

Foreign businesses with VAT-related transactions in the UAE may qualify for refunds. Our team streamlines the process to help recover VAT efficiently. Reciprocity Verification

• Confirming eligibility based on tax treaties and reciprocity agreements

• Ensuring compliance with UAE’s foreign VAT refund policies

Claim Submission Assistance

• Preparing and submitting VAT refund claims on behalf of foreign businesses

• Communicating with tax authorities for follow-ups and approvals

4. Expert VAT Advisory & Compliance Services

VAT laws in the UAE are constantly evolving, and businesses must stay up to date to avoid penalties. Our team provides expert advisory services to help businesses remain compliant and optimize their VAT strategies. VAT Compliance Consultation

• Ensuring businesses follow updated UAE tax regulations

• Assisting with VAT audits and compliance checks

Tax Optimization Strategies

• Advising on VAT-efficient business models

• Identifying opportunities to maximize tax benefits

Ongoing Support & Updates

• Providing continuous updates on VAT policy changes

• Offering tailored guidance based on business needs

With Young and Right, you can confidently claim your VAT refunds quickly, efficiently, and in full compliance with UAE tax laws.

Conclusion

VAT refunds in Dubai provide financial relief for businesses, tourists, and international entities. Understanding eligibility criteria and following the correct procedures can ensure a seamless VAT refund process. For businesses looking to streamline their VAT refunds, Young and Right provides expert advisory services to ensure compliance and maximize VAT recovery.