What is Recoverable Input VAT ?

Definition: "Input VAT is ​amount of Tax paid by a Person or due from him when Goods or Services are supplied to him, or when conducting an Import."

"Recoverable input VAT is amount of tax that were paid and can be repaid by the Authority to the Taxpayer pursuant to the provisions of the Decree-Law.

Example:  5% of tax paid over and above the value of the purchase made by a registered business/ person under UAE VAT. 

​Input tax is the tax paid by a person on purchases or inward supplies. A major element of VAT in UAE is the provision to recover the tax paid on inputs. This means that a person can reduce the value of input tax eligible for recovery from the tax payable and only pay the balance amount as tax. This ensures that tax is paid only on the value added at each stage in the supply chain. Hence, the amount of input tax eligible for recovery plays an important role in the cash flow and operating expenses under VAT.

How much of the input tax paid by a registered business/ person would be recoverable depends upon many factors. 

A. Input tax paid on expenses related to taxable supply (All input VAT is Recoverable input VAT in the vat return of the registered business/ person. 
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B. Input tax paid on expenses related to non-taxable/exempt supply ( All input VAT may not be Recoverable input VAT in the vat return of registered business/ person.)

C. Input tax paid on expenses related to both taxable and non-taxable/exempt supply ( % of total input VAT may be Recoverable input VAT in the vat return of registered business/ person.)
Recoverable on a proportionate basis by the registered VAT person.
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Gupta Accountants competent team as Vat Consultants in Dubai, provides supports at all the stages of the Value Added Tax on good and services in UAE to local  companies, free zone based companies  and designated zone based companies of Dubai, Abu Dhabi Sharjah, Umm Al Quwain, Ajman, Ras Al Khaimah and Fujairah.
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