A taxable person with excess recoverable tax may apply to the Federal Tax Authority to reclaim that excess, or part of it, in accordance with the periods and procedures set by the Executive Regulation, and the Decree-Law also provides for special cases in which tax paid is refunded to specific persons even where they are not taxable persons.
Reclaiming Excess Recoverable Tax
The Decree-Law provides that, subject to the provisions of the Tax Procedures Law and its Executive Regulation, and without prejudice to the Authority's right to make an offset, a taxable person may submit a request to the Authority to reclaim excess recoverable tax, or part of it, in accordance with the periods and procedures set by the Executive Regulation.
The Executive Regulation clarifies that where a taxable person has excess recoverable tax for a tax period and submits a request to the Authority through the means it specifies, the Authority must refund the excess amount to that person within the period and in accordance with the procedures set out in the Tax Procedures Law. If no refund request is submitted, the excess is carried forward to subsequent tax periods.
Special Refund Cases
The Decree-Law allows the Authority, in accordance with the conditions and controls set by the Executive Regulation, to refund tax paid on any supply or import made by each of the following:
- A UAE national, in respect of goods and services related to constructing a new residence not made in the course of conducting business.
- A person not resident in the State or in an Implementing State who conducts business and was not a taxable person.
- A non-resident person, in respect of goods supplied to them in the State that will be exported.
- Foreign governments, international organizations, bodies and diplomatic missions, in accordance with agreements to which the State is a party.
The Tax Refund Scheme for Tourists
Another form of special refund is the tax refund scheme established by the Cabinet for the benefit of an "overseas tourist", defined as any natural person who is not resident in the State or in an Implementing State, who is not a member of the crew of a flight or sea voyage, and who leaves the State to a place outside the Implementing States, in respect of goods purchased and exported with them.
Illustrative Example
Illustrative example: if a business's recoverable input tax for a tax period exceeds its output tax due for the same period, an excess arises, and the business may apply to the Authority to reclaim it, or carry it forward to be deducted from the tax due in a subsequent tax period.
Legal References
- Federal Decree-Law No. (8) of 2017 on Value Added Tax — Article (74) and Article (75)
- Cabinet Decision No. (52) of 2017 on the Executive Regulation of Federal Decree-Law No. (8) of 2017 on Value Added Tax — Article (65)
- Cabinet Decision No. (41) of 2018 on the Application of the Tax Refunds for Tourists Scheme — Article (1)
For questions about your specific situation, you can ask the UAE Tax & Legislation Helper on Helpers, or consult a licensed chartered accountant.