VAT refunds for pavilions at Expo 2020 Dubai

Only official participants - countries and intergovernmental organisations which have received and accepted official invitation from the UAE - in a non-commercial capacity as an exhibitor will benefit from this VAT refund scheme.

Maximum 20% of pavilion space allowed for commercial activity to claim tax return.

Countries and inter-government agencies will be able to claim value-added tax (VAT) refund

for the costs incurred for the developments of pavilions at Expo 2020 Dubai.

According to a Cabinet decision posted on the Federal Tax Authority's (FTA) website, the commercial space should be less than 20 per cent of the space to be entitled for the refund. The Expo 2020 Bureau will largely administer this process.

Anurag Chaturvedi, managing partner at Chartered House, said the official participants of Expo 2020 may claim a refund where it is incurred in direct connection with the construction, installation, alteration, decoration and dismantlement of their exhibition space.

The application for refunds will be submitted to the bureau, which will perform an initial audit and then request the FTA to refund the amount. The official participant would have to obtain a certificate of refund entitlement from the Expo 2020 Bureau. "A certificate of refund entitlement shall not be granted to any official participant in respect of imports and supplies covered more than 20 per cent of the exhibition space or presentation is used, or intended to be used, for commercial or non-official purposes," Chaturvedi said.

The UAE, as part of the GCC framework, levied 5 per cent VAT on a host of goods and services from January 1, 2018. It expects to generate Dh12 billion revenues in 2018 and Dh20 billion in 2019. VAT refunds will reduce the cost of setting up pavilions and other related charges for the participating countries of Expo 2020, which will run for six months from October 20, 2020, onwards.

Jitendra Gianchandani, chairman and managing partner at Jitendra Consulting Group, said only official participants - countries and intergovernmental organisations that have received and accepted official invitation from the UAE - in a non-commercial capacity as an exhibitor will benefit from this VAT refund scheme.

"This means official participants in a commercial capacity will not be entitled for the VAT refund. Apart from that official participants will not be entitle for the refund if more than 20 per cent of the exhibition space is used for the commercial purpose," he added.

Gianchandani noted that the official participant may also claim VAT refund paid on the import of goods for personal use by the official participant's section commissioner-general, section staff and beneficiaries.

Per the notification, Gianchandani further explained that where a refund has been granted to the official participant in respect of any import of goods, these goods cannot be sold for a consideration or transferred free of charge without prior consent in accordance with the procedures agreed upon between the FTA and the Expo 2020, and without payment of the tax.

Nimish Goel, partner at WTS Dhruva Consultants, said the decision will benefit participants to claim VAT refund, especially where it is not registered for UAE VAT.

"This will encourage greater participation of companies in Expo 2020. By way of granting refund of VAT, the government is effectively making all purchases and imports of goods and services tax-free. A refund shall be available for all purchases used in construction and building of pavilions at the Expo," said Goel.

"This is a very positive step that goes to show that UAE government is highly committed to have increased participation of the companies and governments leading to a significant increase in footfall and increased investment in the country."

Girish Chand, director at MCA Management Consultants, said this Cabinet decision will benefit pavilions that are primarily showcasing their country capabilities and products and do not have non-official/commercial element in excess of 20 per cent of the leased-out space.

"If they're registered, they will be entitled to input tax credit. However, if they are not registered, this will enable them to claim refund on the goods and services cost incurred on constructing the pavilions and the maintenance cost over the Expo duration. This benefit would be extended to VAT incurred on import of goods for personal use of the official participant's section commissioner-general, section staff and beneficiaries," Chand added.

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