Exporters See Cost Savings As UAE Simplifies VAT Refunds

The new Cabinet Decision No. 100 of 2024 has brought significant changes to the UAE’s VAT law and has also introduced incentives for businesses and investors. One major incentive is nullifying the requirement to obtain Exit Certificates to claim VAT refunds. The new amendments will be imposed with full effect on the 15th of November, 2024. This article will explain how the UAE has simplified VAT refunds for exporters.

You can also reach out to our expert tax agents at Tax Gian to know how the new amendments may affect your business. Our knowledgeable experts will guide you on how you can stay in compliance keeping in view the new amended VAT regulations.

Background

Previously, exporters had to fulfil certain formalities regarding VAT when it came to exporting supplies. They had to obtain and show commercial evidence or official evidence to prove that the supplies had left the jurisdiction. Here, official evidence is an exit certificate, customs documents or invoices from emirate customs. And commercial evidence can be a shipment certificate, airway bill, consignment paper, etc. Failing to provide any of these documents as proof of export resulted in the exporter failing to prove its exports. This made the exporter charge five per cent VAT on goods. Moreover, obtaining this evidence would cost about 200 AED for each certificate.

However, the Cabinet Decision has made things easier for exporters allowing them to export supplies without providing any certificates making VAT refunds simple for them. Simple documents are now enough to prove exports. This will be acceptable from the 15th of November, 2024 only. It will significantly reduce compliance costs for exporters.

New Export Obligations

The exporters must have at least some documentation to show that they are sending some supplies outside the country as exports. The rules are not as hard and fast as previously. Now, the exporters are left with 3 options;

• A clearance certificate or export certificate from Emirates Customs would be enough.
• A shipping certificate from any transport company that you are using to transport your goods would be enough.
• Any other commercial evidence such as an airway bill or consignment note will be enough.
• You can acquire further guidance from Jitendra Tax Consultants on what you can use as a piece of evidence to export your products and claim VAT refunds.

Incentives for Exporters

The amendments introduced by the Cabinet will bring numerous advantages for exports when it comes to the VAT refund procedure;

• New and explicit guidelines will result in better compliance for exporters eliminating the risk of grave errors and ultimately saving exporters from hefty penalties.
• The export procedure will be simplified allowing exporters to boost their exports and expand. This will also increase competitiveness in the business market.
• VAT refunding will be faster and will ultimately increase cash flow.
• It will significantly reduce compliance costs and administrative burdens for exporters as there will be no need for obtaining different approvals and certificates.

Please note that only those exporters who have already registered for VAT and are taxpayers will be able to enjoy these benefits. Also, exporters must have valid documents for the export of services and goods.

Recommendations for Exporters

• Exporters can claim these benefits by incorporating the following best practices;
• Exporters should consult with expert tax agents to understand how they can claim and maximise benefits offered by new regulations.
• Exporters should make sure they are maintaining their records and documentations properly.
• Exporters should submit refund claims on time and accurately.
• Exporters should have a clear understanding of the procedures simplified by new amendments.

Why Choose Tax Gian?

At Tax Gian, our experts are always tracking new changes and updates in the taxation framework of the country. They will not only let you stay informed of the changes but will also suggest useful measures to stay compliant with the continuously changing tax policies. Risks of penalties are reduced to zero when experts like JTC are backing you up.