The Dubai Customs along with the Federal Tax Authority (FTA) introduced a new service for VAT refunds on March 26, 2021. The new service is called ‘Export Verification Report’. It will be used for VAT refunds against the ‘Cleared Export Declaration’, which will be valid only for a period of not more than three months. The FTA and the Dubai Customs released a notification on the new development on March 17, 2021.
FTA users, Customs Bureau Officers, Importers, Traders, and Authorized Customs Brokers can generate this report by providing the relevant details. It is also possible to generate a consolidated ‘Export Verification Report’ of multiple importers under a single TRN linked with multiple business codes. This process will ensure a refund of VAT to the original importers, which was not possible until now even after an export declaration.
This is because until now, the export declaration did not require mentioning of all the original importers’ details. The absence of all the importers’ names and import declaration details in the export declaration for imports and exports led to the non-approval of the VAT refund claims.
This new development will bring changes to the current export process because of the involvement of applicable VAT. Earlier, the process involved the following steps, which led to problems due to VAT:
- Traders pay VAT on the goods, which are then sold in the local market
- Agent of the overseas buyer or the overseas buyer collects goods from several traders
- The overseas buyer prepares and submits a single ‘Export Declaration Form’ which consists of the name of a single exporter name and business code
- The original importer submits the Export Declaration form and ‘Exit Certificate upon Export’
- Since the form contains only one importer’s details, the VAT refund claims are not approved
Due to the new export mechanism, from March 26, 2021, there is a newly added process of generating the ‘Export Verification Report’ that includes the following steps:
- The trader who will export its goods or the authorized customs broker logs into the Dubai Trade Portal
- They generate the request for ‘VAT Export Verification Report’
- Exporter’s valid M2 Import Declaration number and importer’s Tax Registration Number (TRN) must be available to generate ‘Export Verification Report’
- The person generating the report enters the TRN, report period range, importer’s code, and importer’s name
- The system validates and retrieves all the information related to the linked export and import declarations
- Finally, the Export Verification Report’ is generated
- The trader or authorized customs broker can search and download the report from the portal
- The report is then submitted to the FTA as proof for VAT refund claims
Thus, the new export mechanism will make the process of claiming for VAT refunds easier and more clear for all the stakeholders involved, thereby ensuring a lesser number of cases of non-violation of VAT payments. If you still have doubts about this or are looking for expert, professional help to understand the implications of this mechanism or other VAT provisions for your business, you can let us know.
We, at NR Doshi & Partners, can help you with any problems in your VAT refund claims, accounting, and returns filing. We have the required expertise, skills, and experience in dealing with the VAT implications for multiple industries in UAE. We have been dealing with VAT since the time VAT was introduced in UAE, and therefore, we are well-equipped to give you the best VAT-related advice for your business. We are FTA-registered tax agents and our VAT consulting services are backed by our belief in client satisfaction, data confidentiality, and full compliance.
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