EXPO 2020 Dubai and Impact of UAE VAT in Business Transaction
Expo 2020 Dubai, the worldwide business show will be facilitated in Dubai from 20th October to 10th April 2021. Participants of the 2020 Expo have queries and are worried about refunding the VAT paid in UAE during their participation in 2020 Expo. This article provides a comprehensive understanding of the impact of UAE VAT on the 2020 Expo.
Participants of 2020 Expo
There are many Countries and intergovernmental organizations which have received and accepted the official invitation. So far around 190 countries over the world already have accepted the invitation and confirmed their participation in the Expo 2020 Dubai. The UAE VAT law is also applicable to the official participants of Expo 2020 as the Expo 2020 is going to held in the UAE mainland.
Bureau Expo 2020 Dubai
The Bureau Expo 2020 Dubai established by virtue of Decree No 30 of 2014 issued by the Ruler of Dubai shall be the governing body for the refund scheme.
Applicability of UAE VAT on the participants of Expo 2020 Dubai
As the Expo 2020 will be held in. UAE mainland; all the provisions of the UAE VAT Law that are applicable to a mainland company will also be applicable to the official participants.
1. A participant should register for VAT if the value of their taxable supplies, import (for commercial or non-commercial purposes) and export in the country exceed the mandatory threshold limit i.e. AED 375,000/-
2. Those who are registered for VAT should issue proper tax invoice against taxable supplies effected at the Expo 2020 Dubai
3. VAT Return Filing on a periodic basis as prescribed should be submitted to the Federal Tax Authority (FTA)
4. He / She must follow and subject to all other rules and laws of UAE VAT.
Recoverability of Input VAT by official participants
The general UAE Tax rules will not allow the official Participants to refund the VAT paid which are related to expo 2020 unless they are registered for VAT in UAE but cabinet 1 of 2019 in certain situations provides a Tax relaxation for the official participants so Official Participants are eligible to recover VAT on certain Goods and Services which were imported or acquired.
1. Where the Official Participant is not registered for UAE VAT, the refund applications can be made through the Bureau by submitting a special refund application to the Bureau.
2. Where the Official Participant is registered for VAT, it may reclaim VAT via its UAE VAT return.
Typically, a person may only recover VAT incurred in the UAE on Goods and Services, where the Goods and Services are used or intended to be used for making taxable supplies. Where incurred expenses do not relate to any taxable supplies made by the person, VAT is not recoverable.
The official participants of the 2020 Expo are eligible to recover the input tax paid on the following expenses without using them for making taxable supplies:
1. Goods and Services relating to the actual operation of the office of the Official Participant provided that the value of each Good or Service for which a claim is made is not less than AED 200.
2. Import of Goods for the personal use of the Official Participant’s Section Commissioner-General, Section Staff and the Beneficiaries
3. Goods and Services in direct connection with the construction, installation, alteration, decoration and dismantlement of their exhibition space
4. Goods and Services in direct connection with the operation of their exhibition space and any presentation within the Expo 2020 site
The above (3 &4) inputs can be recovered subject to the condition that the official participant must be in possession of a Certificate of Refund Entitlement issued by the Burean.
Certificate of Refund Entitlement
An Official Participant (both registered and not registered for VAT) must apply for a Certificate of Refund Entitlement before attempting to reclaim VAT on Goods and Services under above specified categories. A certificate reference number will be provided to the Official Participant and must be referenced in all special refund applications concerning Goods and Services that fall under specified categories.
Eligibility Criteria for the Certificate of Refund Entitlement
In order to be eligible to apply for the Certificate:
– The applicant must be an Official Participant of the Expo 2020 in Dubai, holding a valid Expo 2020 trade license number.
– Not more than 20% of the exhibition space or presentation is, has been, or is intended to be used for non-official or commercial purposes.
If the Certificate of Refund Entitlement is not granted to the Official Participant (for example, if more than 20% of exhibition space will be used for non-official or commercial purposes), the Official Participant will not be able to reclaim full amount of VAT in respect of Goods and Services under Categories 3 and 4. Instead, the Official Participant may need to consider if any VAT related to such Goods and Services may be recoverable under the general VAT rules applicable to VAT registered person.
Relaxation from tax liability in respect of imports
Article 48 of the Federal Decree-Law No 8 of 2017 on Value Added Tax provides that if the Taxable Person imports taxable Goods or Services for the purposes of his Business, then he shall be treated as making a Taxable Supply to himself, and shall be responsible for all applicable Tax obligations and accounting for Due Tax in respect of these supplies.
However, in respect of imports made by official participants, they can be relieved from import VAT by using the special TRN (Tax Registration Number) allocated to the Bureau, in coordination with the Bureau, provided they hold a Certificate of Refund Entitlement. Where the special TRN is used the official participants should not include such goods in any refund application.
How RVG Chartered Accountants can support you?
We will support you with respect to the following:
1. 2020 Expo Dubai trade license application and Emirates ID in case of applicant’s representative
2. Support in filing the periodic VAT return and refund application
3. Registration for VAT with the Federal Tax Authority
4. Compliance support in filing the Certificate of refund entitlement
5. Regular communication and follow up with the Bureau on your behalf
6. Deregistration for VAT after completion of 2020 Expo
7. Providing you with the latest updates in UAE VAT that are relevant to 2020 Expo.