Expo 2020 is a platform that promises creativity, innovation, and cultural diversity. With just months to go for the most awaited event, there is an air of uncertainty with regards to the VAT paid on goods and services associated with the expo, and its refund. The Federal Tax Authority has recently released the Cabinet Decision No. (1) of 2019 on the Refund of Value Added Tax Paid on Goods and Services connected with Expo 2020 Dubai.
- Should official participants of Expo 2020 pay VAT on goods and services and if yes, can they recover the VAT amount paid?
Official Participants of Expo 2020 will have to pay VAT on Goods and Services connected to the expo as per normal UAE VAT rules. In certain situations, the offices of the Official Participants can recover VAT on certain Goods and Services which were imported or acquired. In the case of an official participant who has not registered for UAE VAT, a special refund application can be submitted to the bureau. If the official participant has registered for VAT, it can be reclaimed via UAE VAT return.
- What is the mandatory threshold limit for an official participant to register for VAT?
An Official Participant can register for VAT only if the value of their taxable supplies or imports (for commercial or non-official purposes) in the UAE exceeds, or is anticipated to exceed, the mandatory registration threshold of AED 375,000.
- Can an official participant claim for refund if the VAT incurred on goods and services does not relate to taxable supplies?
Under general principles, a person can recover VAT only if the goods and services are used or intended to be used for making taxable supplies. One cannot claim for refund if the VAT incurred on the goods and services does not relate to any taxable supplies. However, offices of the official participants can reclaim VAT for certain categories of goods and services, even if they are not used for taxable supplies.
- Who are official Participants?
Countries and intergovernmental organizations which have received and accepted the official invitation from the State to participate in the Expo 2020 Dubai engaged in a non-commercial capacity as an exhibitor.
- Which are the categories of goods and services for which VAT can be reclaimed by the offices of the official participants?
When it comes to the Offices of the Official Participants, VAT incurred on the import and acquisition of the following five categories of Goods or Services can be reclaimed, even if they are not used for making taxable supplies;
- VAT incurred by the Official Participant on Goods and Services in direct connection with the construction, installation, alteration, decoration and dismantlement of their exhibition space;
- VAT incurred by the Official Participant on Goods and Services in direct connection with the works and activities of organizing and operating the Official Participant’s exhibition space and any presentations and events within the Expo 2020 site;
- VAT incurred by the Official Participant on Goods and Services relating to the actual operations of the Official Participant, provided that the value of each Good or Service for which the Office of the Official Participant makes a claim is not less than AED 200;
- VAT incurred by the Official Participant in connection with all operations, services and activities provided for the purpose of participation in Expo 2020 Dubai, whether located within or outside the boundaries of the Expo 2020 Dubai site; and
- VAT incurred on import of Goods for personal use of the Official Participant’s Section Commissioner-General, Section Staff and the Beneficiaries.
In addition to the above categories of expenses, where the office of the Official Participant is registered for VAT in the UAE, it may be able to recover VAT on other types of expenses under the general VAT rules.
- Is there any certificate required from EXPO 2020 Bureau for claiming the refund of VAT paid?
In order to be eligible to reclaim VAT on expenses under categories A and/or B (or expenses which relate to multiple categories including A or B) in question 5 above, the Official Participant must be in possession of a Certificate of Entitlement issued by the Bureau. Where expenses do not relate to categories A and B and are covered by categories C, D, or E, then a Certificate of Entitlement is not required to apply for a refund.
- What is certificate of Entitlement?
An Official Participant (whether its Office is registered or not registered for VAT) must apply for a Certificate of Entitlement before attempting to reclaim VAT on Goods and Services under categories A and B described in question 5 above. 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 categories A and B.
- Can the goods imported for EXPO 2020, for which VAT refund has been claimed, be sold for consideration or transferred free?
Where a refund has been granted to the Office of the Official Participant in respect of any import of Goods, the Goods cannot be sold for consideration or transferred free of charge without the prior consent in accordance with the procedures agreed upon between the FTA and the Bureau, and without payment of the Tax.
- Is there any provision to import goods without paying import VAT for EXPO 2020?
In respect of imports made by Official Participants, it should be noted that they may use the special TRN (Tax Registration Number) allocated to the Bureau, in coordination with the Bureau, where the goods fall under categories A and B in question 5 above, and they hold a Certificate of Entitlement. Where the special TRN is used, no import VAT will be imposed in respect of the goods, and such goods should not be included in any refund application.