Input Tax Recovery under VAT in UAE:
1. The Input Tax that is recoverable by a Taxable Person for any Tax Period is the total of Input Tax paid for Goods and Services which are used or intended to be used for making any of the following:
a. Taxable Supplies.
b. Supplies that are made outside the State which would have been Taxable Supplies had they been made in the State.
c. Supplies as specified under the rules & regulations made the there under UAE VAT Law from time to time that are made outside the State, which would have been treated as exempt had they been made inside the State.
2. Where Goods are imported by a Taxable Person through another Implementing State and the intended final destination of those Goods was the State at the time of Import, then the Taxable Person shall be entitled to treat the Tax paid in respect of Import of Goods into the Implementing State as Recoverable Tax subject to conditions specified as specified under the rules & regulations made the there under UAE VAT Law from time to time. ( These provision would be applicable upon the implementation of the VAT in all the GCC member states)
3. Where Goods were acquired by a Taxable Person in another Implementing State and then moved into the State, the Taxable Person shall be entitled to treat the Tax paid in respect of the Goods in the Implementing State as Recoverable Tax subject to the conditions as specified under the rules & regulations made the there under UAE VAT Law from time to time. ( These provision would be applicable upon the implementation of the VAT in all the GCC member states)
4. A Taxable Person shall not be entitled to recover any Input Tax in respect of Tax paid in, where the in case the final destination of the Goods when entering the State is another Implementing State, the Taxable Person shall pay the Due Tax on Import of Concerned Goods pursuant to the mechanism specified as specified under the rules & regulations made the there under UAE VAT Law from time to time. ( These provision would be applicable upon the implementation of the VAT in all the GCC member states)
5. The rules & regulations made the there under UAE VAT Law from time to time would specify the instances where Input Tax is excepted from being recovered.
1. The Input Tax that is recoverable by a Taxable Person for any Tax Period is the total of Input Tax paid for Goods and Services which are used or intended to be used for making any of the following:
a. Taxable Supplies.
b. Supplies that are made outside the State which would have been Taxable Supplies had they been made in the State.
c. Supplies as specified under the rules & regulations made the there under UAE VAT Law from time to time that are made outside the State, which would have been treated as exempt had they been made inside the State.
2. Where Goods are imported by a Taxable Person through another Implementing State and the intended final destination of those Goods was the State at the time of Import, then the Taxable Person shall be entitled to treat the Tax paid in respect of Import of Goods into the Implementing State as Recoverable Tax subject to conditions specified as specified under the rules & regulations made the there under UAE VAT Law from time to time. ( These provision would be applicable upon the implementation of the VAT in all the GCC member states)
3. Where Goods were acquired by a Taxable Person in another Implementing State and then moved into the State, the Taxable Person shall be entitled to treat the Tax paid in respect of the Goods in the Implementing State as Recoverable Tax subject to the conditions as specified under the rules & regulations made the there under UAE VAT Law from time to time. ( These provision would be applicable upon the implementation of the VAT in all the GCC member states)
4. A Taxable Person shall not be entitled to recover any Input Tax in respect of Tax paid in, where the in case the final destination of the Goods when entering the State is another Implementing State, the Taxable Person shall pay the Due Tax on Import of Concerned Goods pursuant to the mechanism specified as specified under the rules & regulations made the there under UAE VAT Law from time to time. ( These provision would be applicable upon the implementation of the VAT in all the GCC member states)
5. The rules & regulations made the there under UAE VAT Law from time to time would specify the instances where Input Tax is excepted from being recovered.
Important concepts in relation to Input Tax Recovery under VAT in UAE:
What is Input Tax ?
Tax paid by a Person or due from him when Goods or Services are supplied to him, or when conducting an Import as specified under the UAE VAT Law and rules & regulations made the there under from time to time.
What is Capital Assets Scheme ?
Scheme whereby the initially recovered Input Tax is adjusted based on the actual use during a specific period.
What is an Implementing States ?
The GCC States that are implementing a Tax law pursuant to an issued legislation.
What is Taxable Supply ?
A supply of Goods or Services for a Consideration by a Person conducting Business in the State, and does not include Exempt Supplies.
What is Exempt Supply ?
A supply of Goods or Services for Consideration while conducting Business in the State, where no Tax is due and no Input Tax may be recovered except as specified under the UAE VAT Law and rules & regulations made the there under from time to time.
Who is a supplier ?
A supplier is a person or business that provides a product or service to another person or business.
What is consideration ?
All that is received or expected to be received for the supply of Goods or Services, whether in money or other acceptable forms of payment.
What is business ?
Any activity conducted regularly, on an ongoing basis and independently by any Person, in any location, such as industrial, commercial, agricultural, professional, service or excavation activities or anything related to the use of tangible or intangible properties.
Who is Taxable Person ?
Any Person registered or obligated to register for Tax purposes under UAE VAT Law.
What is Tax Period ?
A specific period of time for which the Payable Tax shall be calculated and paid.
What is Goods ?
Physical property that can be supplied including but not limited to real estate, water, and all forms of energy as specified in this Decision.
What is Services ?
Anything that can be supplied other than Goods.
What is Input Tax ?
Tax paid by a Person or due from him when Goods or Services are supplied to him, or when conducting an Import as specified under the UAE VAT Law and rules & regulations made the there under from time to time.
What is Capital Assets Scheme ?
Scheme whereby the initially recovered Input Tax is adjusted based on the actual use during a specific period.
What is an Implementing States ?
The GCC States that are implementing a Tax law pursuant to an issued legislation.
What is Taxable Supply ?
A supply of Goods or Services for a Consideration by a Person conducting Business in the State, and does not include Exempt Supplies.
What is Exempt Supply ?
A supply of Goods or Services for Consideration while conducting Business in the State, where no Tax is due and no Input Tax may be recovered except as specified under the UAE VAT Law and rules & regulations made the there under from time to time.
Who is a supplier ?
A supplier is a person or business that provides a product or service to another person or business.
What is consideration ?
All that is received or expected to be received for the supply of Goods or Services, whether in money or other acceptable forms of payment.
What is business ?
Any activity conducted regularly, on an ongoing basis and independently by any Person, in any location, such as industrial, commercial, agricultural, professional, service or excavation activities or anything related to the use of tangible or intangible properties.
Who is Taxable Person ?
Any Person registered or obligated to register for Tax purposes under UAE VAT Law.
What is Tax Period ?
A specific period of time for which the Payable Tax shall be calculated and paid.
What is Goods ?
Physical property that can be supplied including but not limited to real estate, water, and all forms of energy as specified in this Decision.
What is Services ?
Anything that can be supplied other than Goods.