Can You Adjust Excess VAT in Future Returns?

Introduction

As cross-border trade and infrastructure projects grow across the Gulf Cooperation Council (GCC), it's vital for businesses involved in multi-jurisdictional projects to understand how VAT applies and when VAT refunds are allowed.

It explains the concept of VAT refund for projects spanning multiple GCC countries, including the UAE's position, eligibility rules, and the documentation required for claiming refunds when VAT is incurred in another GCC member state.

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📚 Background: Unified GCC VAT Framework

The GCC states signed a Unified VAT Agreement in 2016, which forms the basis for VAT implementation across member countries. While each country has its own VAT laws, the Agreement outlines shared principles, including:

• Mutual recognition of VAT registrations

• Tax treatment for intra-GCC supplies

• Provisions for cross-border VAT refunds

As of 2025, UAE, KSA, Bahrain, and Oman have implemented VAT. However, GCC VAT systems are not yet fully integrated, meaning each country operates its own refund mechanism.

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✅ When Can a UAE Business Claim VAT Paid in Another GCC Country?

UAE-based companies involved in projects or activities in other GCC countries (e.g., KSA, Oman, Bahrain) may incur input VAT on:

• Imports

• Construction materials

• Local subcontractors

• Hotel stays, car rentals, etc.

You may be eligible for a VAT refund from that country’s tax authority if:

1. You are not established or VAT registered in that country.

2. You have not made any taxable supplies there (unless under reverse charge).

3. The VAT was incurred solely for business purposes.

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🌍 Example Scenarios

Scenario Refund Eligibility

A UAE contractor builds a pipeline extending into Oman, buys Omani cement ✅ May claim Omani VAT refund

UAE consultant attends a seminar in Riyadh and stays in a KSA hotel ✅ Can apply for KSA VAT refund

UAE firm opens a temporary site in Bahrain but makes local sales ❌ May require VAT registration instead of refund

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📑 Required Documents for Cross-Border VAT Refunds

While procedures vary by country, the following are commonly required:

• Certificate of VAT registration in UAE

• Proof of incorporation

• Original tax invoices with foreign VAT clearly mentioned

• Bank account details

• Proof of business activity related to expense

• Power of attorney (if filing via agent)

Most applications must be submitted in the language of the refund country (Arabic for UAE/KSA/Oman).

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📅 Timeline and Deadlines

Country Refund Period Deadline to Submit Minimum Refund Value

UAE Jan–Dec annually Aug 31 following year AED 2,000

KSA Jan–Dec annually Jun 30 following year SAR 1,000

Oman Quarterly End of month following quarter OMR 100

Bahrain Annual Jun 30 following year BHD 100

📌 Late submissions are not accepted in most GCC countries.

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📥 How to File a GCC Cross-Border VAT Refund

Each country has its own refund portal or submission method. Here's a summary:

🔹 To Claim VAT from KSA:

• Portal: ZATCA (zatca.gov.sa)

• File using the Non-Resident Refund Application

• Arabic translation may be required

🔹 To Claim VAT from Oman:

• Via the Oman Tax Authority e-portal

• Form: “VAT Refund for Foreign Businesses”

• Attach invoice scans and VAT certificate

🔹 To Claim VAT from UAE (for foreign GCC firms):

• Visit eservices.tax.gov.ae

• Create non-resident account

• Submit VAT Refund - Foreign Business Visitor Form

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🔁 Important Notes on GCC Integration

Although GCC states share a VAT framework, full integration (e.g., intra-GCC reverse charge, automatic input VAT adjustments) is not yet implemented.

This means:

• Cross-border transactions are treated as imports/exports

• Refunds must be handled manually through each country’s authority

• There is no single GCC VAT number yet

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🛑 Common Pitfalls to Avoid

Mistake Result

Not checking refund deadlines Automatic disqualification

Submitting without translated invoices Rejection or delay

Claiming VAT while being registered in the country May trigger penalties

Claiming for non-business expenses Refund denied

Ignoring local VAT caps and exclusions Refund partially accepted

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💼 Final Thoughts

Cross-border VAT recovery can be complex — but potentially rewarding, especially for contractors, consultants, and logistics businesses involved in regional projects.

By tracking your VAT costs country-wise and maintaining documentation, you can recover significant costs incurred in GCC jurisdictions.

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📣 Need Assistance with GCC VAT Refunds?

At Sheikh Anwar Accounting & Auditing LLC, we help:

• UAE companies recover VAT from GCC states

• File refund applications in KSA, Oman, Bahrain

• Translate and validate tax documents

• Maintain GCC-wide VAT compliance

📧 Email: info@sa-auditors.com

🌐 www.sa-auditors.com