Article 33 and VAT Refund

A client based in Dubai engaged in the business of transportation in relation to the import & export activities & the trade license shows the activity as ‘’Loading & Unloading and Transportation by Heavy Vehicles’’.

Basically, the client is facilitating the importer & exporters by transporting the imported goods coming into state (Dubai) and/or exported goods going out of state by loading/unloading the goods at the port & transporting the same to the importers warehouse & vice versa.

Until now the revenue from the above activity has been taken as Zero rated in the VAT filing as per the Executive Regulations.

Concern – 

The Client have filed the refund for the input availed & he got the refund till now but now FTA is not releasing the refund for last 3 quarters.

As per Article 33, the above activity falls under international transportation services & transport related services.

Clarification Sought – 

Whether the client should continue to file vat returns showing the revenue from above activity under Zero rated as FTA is not releasing the refund?

Replies
SAJITH N24/09/2020 15:15:12

The delay in refund processing could be delay in FTA process to review/assess owing to the large number of claims. If the FTA objects to zero rating they will definitely raise the issue. Regarding Zero rating the transport services, note that one needs to justify with sufficient documentation to evidence that the transport service being provided is part of an international shipment services ie the company is subcontracted to provide certain part of a single line of international shipment and is not an independent transport service that is being provided. If this can be established, one can zero rate the services. Article 33(1)(d) specifies this as "Transporting Goods from a place in the State to another place in the State if the Services are supplied as part, or for the purpose, of the supply of Services of transporting Goods either from a place in the State to a place outside the State or from a place outside the State to a place in the State.". I would suggest to submit an official technical clarification citing the current nature of service and documents available to ensure they would suffice the requirements of FTA.

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