Download Checklist for Input Tax Recovery under VAT in UAE

Tally Solutions | Updated on: February 8, 2022

Input VAT Recovery is a key feature of VAT in UAE. It is the provision given to persons registered under VAT to recover the VAT paid on their purchases, in order to avoid double taxation in the supply chain. Every registered business must consider it essential to calculate the correct amount of input VAT which they are eligible to recover. This checklist is a ready reckoner which will be useful for you to cross-check and ensure that you recover input tax as per the guidelines, leading to an optimum cash flow.

	Conditions for Input VAT Recovery		Supplies not eligible for Input VAT Recovery
1	The supplies should be used to make taxable supplies, i.e. supplies taxed at 5% or zero rate supplies	1	Supplies used to make exempt supplies, such as supply of local passenger transport, supply of bare land, etc.
2	The recipient should receive the Tax Invoice pertaining to the supply and it should be kept in their records. The Tax Invoice should show the details of the supply related to the input tax being recovered	2	Entertainment services, including hospitality of any kind, provided to non-employees, including customers, potential customers, officials, shareholders, owners or investors. Exception: Catering and accommodation services provided by transport service operators to non-employees will not be treated as entertainment service
3	The recipient should pay or intend to make payment of the consideration for the supply within 6 months after the agreed date of payment for the supply	3	Purchase, lease or rent of motor vehicles used for personal use Note: Motor vehicle means a road vehicle designed or adapted for conveyance of not more than 10 people, including the driver. Trucks, forklifts, hoists or similar vehicles are not included. Exception: Motor vehicle used in business will not be treated as being available for personal use in the following cases: · 1.It is a taxi licensed by a competent authority within UAE · 2.It is registered and used for the purpose of an emergency vehicle, including by police, fire, ambulance or similar emergency service · 3.It is used in a vehicle renting business, where it is rented to a customer
		4	Goods or services purchased for use by employees, for which no charge is paid by the employees and it is for their personal benefit. Exceptions: · 1. Where it is a legal obligation to provide the goods or services under an applicable labour Law in UAE or the Designated Zone · 2. Where it is a contractual obligation or documented policy to provide the goods or services for employees to perform their role and it can be proven to be a normal business practice in the course of employment.