01 SEP How to Claim VAT Refund in UAE for Business?
Can an individual entrepreneur return VAT?
Individual entrepreneurs are applying special tax regimes exempted from paying a multitude of taxes. But some individual entrepreneurs may be faced with the need to pay value-added tax (VAT). Whether the entrepreneur is entitled to a refund of the paid amounts, how to draw up and calculate the VAT refund – we will tell in our article.
Recall that the process of payment and reimbursement of VAT is regulated by Chapter 21 of the Tax Code. Only taxpayers are entitled to a tax refund – IP on OSNO. “Special regimes” in the general case are not allowed to claim a refund.
- It is necessary to distinguish between two concepts:
- The refundable VAT is the difference between the sales tax and the “input” VAT that is refundable.
VAT tax deduction – input tax for which the individual entrepreneur can reduce the VAT payable.
Only VAT consultants in Sharjah can apply for a refund, but even individuals with preferential tax treatment can apply for a tax deduction. The products must be intended for operations subject to VAT, or be subject to resale;
Accounting for acquired goods or services is required;
Transactions resulting in a vat consultants in Abu Dhabi deduction must be confirmed by an invoice, accounting documents with the allocation of tax amounts.
The application of the deduction applies to cases when an IP beneficiary issues an invoice to the counterparts with VAT consultancy UAE. The obligation to file a tax return and transfer tax to the budget is followed by the opportunity to receive a tax deduction. Sometimes inspectors of the Federal Tax Service Inspectorate refuse to provide it, as simplest are not VAT payers. When appealing a refusal, the court usually decides in favour of particular regimes.
If the simplest himself purchases products from the supplier based on OSNO and pays VAT, no deduction is due. But the VAT refund of IP on the simplified tax system may take the form of taxation of expenses. Valid, this applies only to IP on the network “Revenues minus expenses”.
A VAT refund for an individual entrepreneur is not allowed on UTII since they do not pay VAT and cannot claim a refund. But in certain situations, “chief executives” are obliged to calculate, pay this tax and submit a declaration to the IFTS. For non-payment of VAT, violation of deadlines or failure to provide reporting IP on the “impute” bear tax liability.
How to eliminate problems with IFTS?
The answer is simple – to maintain reliable accounting. It will allow the timely transfer of VAT and other taxes, determine the amount to be returned from the budget. If an individual entrepreneur does not have the ability (or desire) to make accounting perfect, it is more reasonable to entrust this to an outsourcing company.
VAT refund procedure:
Return VAT IP in a general manner as follows:
- A negative VAT result is reflected in a tax return filed electronically;
- At the same time an application for reimbursement;
- 3 months, inspectors conduct a desk audit, then a positive decision or refusal is issued within 7 days;
- Upon detection of violations, the individual entrepreneur receives an inspection report indicating the reasons for the refusal, which he can refute by providing additional information or appeal in court;
- In case of a positive decision within 5 days, the relevant document is sent to the applicant;
- money is transferred to the settlement account of the individual entrepreneur or accepted for payment of accrued or future payments of VAT, other federal taxes.
- Not all entrepreneurs can reimburse VAT in a declarative (expedited) manner, but only:
- Individual entrepreneurs whose tax payments have exceeded 7 billion rubles over the past three years;
- Individual entrepreneurs who, along with the declaration, presented a bank guarantee;
VAT refund for exported products:
Test for an accountant
In terms of foreign economic activity, VAT refunds are special. A taxpayer is entitled to deduct the tax deducted from him when purchasing goods or services for export operations, or which he paid when importing products into the country. As a result, an individual entrepreneur may receive a VAT refund.
At the same time, it is necessary to confirm the statutory VAT refund, as well as provide the Inspectorate with a package of accompanying documentation for export operations: a customs declaration, waybills for export products, and purchase contracts.
A package of collected papers must be submitted to the Federal Tax Service within 180 days from the date of the export customs procedure, otherwise you will have to pay tax not at a reduced rate of 0%, but at a general rate of 20%.
The VAT refund is a complex process that requires not only knowledge of a large number of details, but also real experience of defending one’s position before the tax authorities. The 1C-WiseAdvice team has such experience and expertise. We are ready to share situations from our practice, as well as ways to resolve them, at a personal meeting, which, by the way, does not oblige you to anything.