VAT q&a: 'Can a UK business visitor reclaim VAT on UAE spending?'

The reader regularly travels from the UK to meet clients in Dubai

Even though I always wanted to be an entrepreneur, making the transition from a full-time employee to a full-time entrepreneur was not easy. Getty

I run a UK business and with many of my customers based in the UAE, I travel frequently to Dubai for client meetings. Many of the costs involved in these visits include UAE VAT.  As a business visitor am I able to claim back this VAT? MT UK

The UAE has implemented a scheme whereby business visitors are able to recover VAT incurred on business expenses. The rules of the scheme are set out in Article 67 of the Executive Regulations and the FTA has also issued a separate user guide on this subject.

You should be able to reclaim VAT as long as your business does not have any form of registered company, branch or office in the UAE and is not legally required to be registered for the tax in the Emirates.  Furthermore, your business has to be registered in the UK and the UK has to have a similar scheme providing VAT refunds to UAE business visitors, which it does. If these criteria are met you may do an annual VAT reclaim with the first claim covering the whole of 2018.

The amount of VAT you are reclaiming has to be Dh2,000 or more. If you have paid less than Dh2,000 in a single year, you would not be entitled to a refund.

The VAT that you can reclaim must be directly related to your business and cannot be for entertaining, which is specifically excluded from all input VAT recovery.  The FTA have issued a user guide to help business visitors reclaim VAT and the reclaim form is available to download from the FTAs website.

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We operate a consultancy firm in Dubai and provide services to clients overseas, based for example in the US or UK. Consultancy projects relate to investment advisory and related legal and administration support. Our consultants do not necessary travel overseas to our clients and most services are provided remotely. I understand that as we are based in Dubai, VAT is chargeable as our place of supply is deemed to be the UAE. However, I assume VAT would be zero-rated as this should be considered as an export of services. I heard conflicting information that if the place of supply is UAE, VAT will need to be charged at 5 per cent and cannot be zero-rated as the work happens in the UAE. TS Dubai

You do not mention in your question the specific types of projects or investments that you are working on as the law is quite complex in determining the rates of VAT that should be charged depending on the nature of the business.​

The general rule covering the place of supply of services is that it is the place of residence of the supplier. You then need to determine if your supplies should be taxed at the standard rate of 5 per cent or the lower rate of 0 per cent.

Article 30 of the Decree Law covers the place of supply in special cases and Article 31 of the Executive Regulations covers the circumstances in which your services are deemed to be an export and can be charged at 0 per cent. An example of one of the special cases is services related to real estate where the place of supply is the location of the real estate regardless of where your client is based. Therefore, as long as your services are not covered by the special cases in Article 30 you can then consider if they fall under the rules for export of services and a zero rating of VAT.

In summary, if your client does not have a place of residence in the UAE and is outside of the UAE when the services are performed then you may zero-rate them. Your client would be considered as being outside the UAE if they only have a short-term presence here of less than a month.  Please do read the legislation and detailed guides supplied by the FTA relating to exporting services.  Their website at www.tax.gov.ae provides a wealth of useful and important information with specific guides covering exports.

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We received an invoice dated January 2018 but did not reclaim the input VAT in our first VAT return filed in May.  Can we claim the invoice in the next VAT return period? MS Dubai

Yes, this is specifically allowed under the VAT legislation. The eligibility to recover input tax is covered in Article 55, parts 1 and 2 of the Executive Regulations. Input tax may be recovered in the first tax period in which you either receive a VAT compliant invoice or you make payment to the supplier. Article 55 further goes on to state that if you are entitled to recover the input tax and you fail to do so in the first tax period, you may include the recoverable tax in the subsequent tax period.

Lisa Martin, a chartered accountant with over 20 years commercial finance experience, is the founder of accounting, auditing and VAT consultancy, The Counting House. Email any VAT queries to [e-mail]