Recovering input VAT is a vital aspect of VAT Registration UAE. It allows businesses registered for VAT to get back the VAT they paid on purchases, avoiding double taxation in the supply chain. Every registered business should make it a priority to accurately calculate the input VAT Registration they are eligible to recover. This checklist serves as a handy reference to ensure you recover input tax invoice per the guidelines, optimizing cash flow.
Prerequisites for Claiming Input VAT
Purchases Not Eligible for Input VAT Recovery
The purchases must be used to make taxable supplies, meaning supplies taxed at 5% or zero rate.
Purchases used to make exempt supplies, like supplying local passenger transport or bare land, etc.
Entertainment services, including hospitality of any kind, provided to non-employees like customers, potential customers, officials, shareholders, owners or investors.
Exception: Catering and accommodation services provided by transport operators to non-employees are not entertainment services.
The recipient must have paid or intend to pay for the purchase within 6 months of the agreed payment date.
Buying, leasing or renting motor vehicles for personal use.
Note: Motor vehicle means a road vehicle for max 10 people including the driver. Trucks, forklifts, hoists or similar vehicles are excluded.
Exception: Motor vehicles used in business are not for personal use in these cases:
It is a taxi licensed in the UAE.
It is registered and used as an emergency vehicle like police, fire, ambulance or similar.
It is used in a vehicle rental business and rented to a customer.
Goods or services purchased for employee use, where no charge is paid by the employee and it is for their personal benefit.
Where providing the goods or services is a legal obligation under UAE labour law or the Free Zone.
Where providing the goods or services is a contractual or documented policy for employees to do their job and is standard business practice.
You can also Register for VAT Registration on our website: