At this point, everyone knows about Value Added Tax (VAT) imposed in the UAE and many other gulf states. Many businesses operating in these countries have already registered for VAT and fulfilling the requirements. However, a few are still lagging in the understanding of the criteria for VAT registration. If you are one of them, the article is going to help you a lot.
Many businesspeople running their companies in UAE overlook the importance of VAT expenses. But, they can recover most of their expenses to save a fortune. For instance, if you have attended a business conference in a foreign country – you can get the airfare back using VAT reimbursement of expenses in the UAE. Is it not interesting?
The article aims to provide you all the essential information about VAT return on expenses. Keep reading to get detailed insights.
What is the VAT Return?
Before moving toward the guidelines for recovery, it is imperative to understand VAT and why companies apply for the VAT return. Value Added Tax (VAT) is a consumer tax. It is imposed in almost all countries in the world, with the exception of a few.
The government of UAE has imposed VAT to reduce the burden of revenue generation on the petroleum industry. The state collects it indirectly on products and services. However, the businesses and individuals can apply for VAT return if they qualify for it.
The essential guide on VAT claim for expenses recovery in UAE
Nevertheless, the Federal Tax Authority (FTA) allowed the VAT registered companies to recover their taxes spent over the business expenses. It merely means that you can claim for VAT return to recover the operating expenses. It requires you to understand the categories of expenses that you can recover.
If you are confused about VAT treatment for business expenses, consider reading the detail given below:
Expenses incurred by medical insurance
Medical insurance is an essential requirement for almost all employers in the UAE. If you are running a business and offer health insurance coverage, you may have paid VAT over it. However, you can reclaim for return. It is because health services are excluded from VAT payments.
Expenses paid for legal consultancy
If you are running a taxable business in UAE and get the best VAT consultancy in Dubai for the legal matters, you can request a refund. Although legal services are not related to the goods and services, VAT registered companies can claim a refund by explaining the scenario. You can reclaim because businesses are not required to get consultation services for every transaction.
Capital expenses
The businesses dealing in the service industry can request for VAT refund paid for capital expenses. For instance, if a firm offers taxable legal assistance and purchases new furniture for their existing employees, the VAT paid over the capital is liable to refund. You can claim for it.
Non-extravagant food and beverage for clients
Surely, many people are not aware that food and beverages ordered for the customers are refundable. It is because when you order something for clients or customers, you are hospitable is recoverable under the VAT guidelines. However, if you take the client to a restaurant for lunch or dinner, you cannot claim for VAT recovery over the expenses.
Petrol consumption for business traveling
If the businessman requires traveling significantly and it incurs a considerable amount of VAT. For example, you are required to deliver the sold goods to the doorstep of the customers. In such a situation, the individual can ask for VAT recovery.
However, you must keep track of the patrol expenses while managing the personal and business travel separately. It is because you can only recover the VAT paid for business tours.
Employee conveyance expenditure
Several business companies operating in the UAE pay higher attention to facilitate their employees. Suppose you are the one who looks for the betterment of your employees with conveyance facilitation. It is because the employer can play its role better by ensuring ease of mobility to the employees. In a case that you have mentioned it in the contract, you can request VAT recovery over the expenditures paid for the conveyance provision.
Expenditures for visa and administration of the workforce
Last but not least, you can apply for a VAT refund for the expenses that your company has paid for the visa processing of the employees. Additionally, you can also recover the VAT paid for administrative services provided to the newly hired employees.
However, it is a tricky thing, so you need to get assistance from the experienced VAT consultants in UAE. It will help you complete the refund process with accuracy!
Recover VAT for business expenditure in Dubai
Summing up, VAT is a newly imposed tax that is collected indirectly. If you have paid VAT for a recoverable expense, apply for a refund today. Don’t forget to provide all essential details with evidence papers to support your case strongly for FTA validation and confirmation. If you are facing any confusion, feel free to consultant with the best consultancy in Dubai-based firms to get the work done successfully!
