Entering VAT recovery is a key function of UAE VAT. This is a provision for those registered in the value-added tax to recover the value-added tax paid at the time of purchase to avoid double taxation in the supply chain. It is vital that every registered company must consider the calculation of the correct input value-added tax. This list is easy to calculate, which is useful for you to cross-check and ensure that you recover input tax in accordance with the guidelines so that you can achieve the best cash flow.
The input VAT recovery conditions do not meet the input VAT recovery conditions
1Supplies are used to make taxable supplies, that is, supplies that are taxed at 5% or zero tax rate. 1Supplies used to provide duty-free supplies, such as local passenger sources, open spaces, etc.
2 The recipient should receive the tax invoice related to the supply and should keep it in the record. The tax invoice should show the details of the supply related to the input tax recovered. 2 Entertainment services, including any entertainment provided to non-employees (including customers, potential customers, officials, shareholders, owners, or investors).
Exception: Food and lodging services provided by transport service operators for non-employees will not be considered entertainment services
3 The receiver shall pay or intend to pay the consideration of the purchase price within 6 months after the agreed payment date. 3 Purchase, lease or rent a motor vehicle for private use. Note: A motor vehicle refers to a vehicle designed as a road vehicle or suitable for transporting no more than 10 people (including the driver). Does not include trucks, forklifts, cranes or similar vehicles.
Exception: Motor vehicles for business use will not be considered for personal use under the following circumstances:
1. This is a taxi licensed by the competent authority of the UAE
2. Registered and used for emergency vehicles, including police, fire, ambulance or similar emergency services
3. Used for car rental business and leased to customers
4 When purchasing goods or services for employees, employees do not need to pay for it, this is for their personal benefit. exception:
1. According to the applicable labor law of the UAE or designated areas, there is a legal obligation to provide goods or services
2. It is a contractual obligation or written policy to provide employees with goods or services to perform their duties, and it is proved to be a normal business practice during the employment process.