New ‘Value Added Tax (VAT) Refund User Guide’ is a Smart Approach to Unified Success
Albert Einstein often said, ‘The clever simplify the complex while the rest complicate the simple.’ The UAE is among the world’s leading nations in digital transformation, which is part of realising the leadership’s vision to make the government the best in the world and providing a comprehensive set of quality services to residents. Given this, The Federal Tax Authority’s (FTA) latest edition of ‘Value Added Tax (VAT) Refund User Guide’ is a key step in the government’s journey to facilitate and help users prepare their VAT claim. While the guide provides information on mechanism to claim a VAT refund, it also outlines conditions to be satisfied for a refund, which include – a bank account validation letter / certificate detailing the account holder’s name (must be the same as the taxable person’s name as registered with the FTA), bank’s name, bank’s address, SWIFT/ BIC and IBAN details.
VAT was introduced in the UAE at the beginning of the year, and since then the FTA has supported the businesses in filing and claiming returns with several initiatives and programmes. However, there have yet been instances of several businesses not being able to claim refunds accurately. It was noted that while some businesses lacked satisfactory evidence to support VAT reclaims, a few others were claiming VAT on non-business use expenses. In addition, age old practices of maintaining accounts, poor book-keeping and failing to comply with government’s notices were all making it difficult for businesses to claim VAT refunds.
With the introduction of the new user guide, the government aims at ensuring greater transparency and fairness for businesses to claim VAT. The new user guide will also assist businesses in transitioning to the new system and provide relevant information for claiming VAT. In the UAE, The FTA has been involved in every step of the way to ensure that UAE businesses transition to a VAT era seamlessly and smoothly, and with the introduction of this new guide, The FTA aims to improve VAT efficiency for both public and private sectors. This is indeed a commendable initiative and speaks high of the government’s efficiency.