ABU DHABI, The Federal Tax Authority (FTA) has launched a mechanism for refunding value added tax (VAT) incurred on building and operating mosques on the FTA’s e-Services portal, in light of Cabinet Decision No. (82) of 2022 in that regard, which came into force on 29th October 2022, covering all mosques in the UAE, provided that the refund applications are submitted within time limits based on the completion date of the mosque’s construction.
In a press statement issued today, the FTA announced that it will begin accepting applications for refunding input tax incurred on building mosques as of Tuesday, 1st November 2022, via the FTA’s e-Services portal. Refund applications for the refund of tax incurred on operating mosques will be accepted at a later date on the same portal.
The FTA’s Director-General, Khalid Ali Al Bustani, emphasised the importance of the decision, which is in line with the wise leadership’s directives to encourage charity work and public benefit activities that are practiced in accordance with the legislation in force in the UAE.
“The Federal Tax Authority is committed to providing clear and transparent procedures, standards and processes to facilitate procedures for customers,” he added. “With that in mind, the refund mechanism has been designed to refund VAT on building, operating, or maintaining mosques for taxpayers who meet the legal requirements for the refund. This, in turn, is part of the Authority’s strategy to provide top-quality services to ensure the happiness of customers with easy online procedures through the FTA’s e-Services portal.”
The Authority explained that according to the Cabinet Decision, basic conditions must be met to be eligible for a refund on input tax incurred on building mosques: The donor must have incurred input tax for goods or services directly related to the construction of the mosque; the construction needs to be approved by the competent authority (the General Authority for Islamic Affairs and Endowments or the local authority concerned with mosque affairs); and the donor must have a mosque operation commencement certificate. Furthermore, one of the two following conditions needs to be met: Either the mosque was handed over or is intended to be handed over by the donor to any other person approved by the competent authority, or the donor operates the mosque based on the approval obtained from the competent authority.
The Cabinet Decision states that basic conditions must be met to be eligible to request the refund of input tax incurred on operating mosques: The operator has the right to request a refund of input tax incurred on goods or services directly related to the operation and maintenance of the mosque, provided that they are not in connection with the commercial annexures of the mosque or their operation; the mosque must be registered as a mosque with the competent authority; and the operator must hold a written permit to operate the mosque for a limited period of time issued by the competent authority, valid for the period for which they are applying for a refund.
The FTA outlined the criteria for recoverable expenditures, noting that the refund of input tax incurred on the construction of mosques includes expenses related to the actual construction process of the mosque, the equipping and furnishing of the mosque, the supply of necessary equipment and devices, maintenance, and all that is required to carry out all the authorised activities of the Mosque to the fullest extent, before the date of the operation of the mosque. Recovering input tax incurred on operating the mosque, covers goods or services directly related to the operation or maintenance of the mosque, provided that they are not in connection with the commercial annexures of the mosque or their operation.
In its press statement, the FTA specified the documents required to complete the application for a refund on input tax incurred on the construction of the mosque, which include two stages: The first stage includes the provision of a copy of the mosque’s operation commencement certificate, a copy of the Emirates ID or passport, a bank account certificate, and any other documents required at a later stage. Meanwhile, documents required for the second stage include the first architectural plan approved by the municipality showing all buildings on the land, the first construction permit, a copy of the contracting agreement (attached with all addendums), a copy of the consultant’s contract (attached with all addendums), and a copy of the bill of quantities, a copy of the bill of materials, as well as all complete tax invoices with proof of payment (such as receipts or payment stamp), and any other documents required at a later stage.
The Federal Tax Authority explained that documents required to request a refund on input tax incurred for operating the mosque include a copy of a written time-limited renewable permit to operate the mosque issued by the competent authority, a copy of the Emirates ID or passport, a bank account certificate, a schedule of expenses incurred for operating the mosque, and a copy of the five highest value tax invoices.
Source: Emirates News Agency