Supplies not eligible for input tax recovery under UAE VAT:
1. Input Tax shall be non-recoverable if it is incurred by a Person in respect of the following Taxable Supplies:
a. Where the Person is not a Government Entity as specified under the UAE VAT Law and rules & regulations made the there under from time to time., and there is provision of entertainment services to anyone not employed by the Person, including customers, potential customers, officials, or shareholder or other owners or investors.
b. Where a motor vehicle was purchased, rented or leased for use in the Business and is available for personal use by any Person.
c. Where Goods or Services were purchased to be used by employees for no charge to them and for their personal benefit including the provision of entertainment services, except in the following cases:
1) where it is a legal obligation to provide those Services or Goods to those employees under any applicable labour law in the State or Designated Zone.
2) it is a contractual obligation or documented policy to provide those services or goods to those employees in order that they may perform their role and it can be proven to be normal business practice in the course of employing those people;
3) where the provision of goods or services is a deemed supply under the provisions as specified under the UAE VAT Law and rules & regulations made the there under from time to time
1. Input Tax shall be non-recoverable if it is incurred by a Person in respect of the following Taxable Supplies:
a. Where the Person is not a Government Entity as specified under the UAE VAT Law and rules & regulations made the there under from time to time., and there is provision of entertainment services to anyone not employed by the Person, including customers, potential customers, officials, or shareholder or other owners or investors.
b. Where a motor vehicle was purchased, rented or leased for use in the Business and is available for personal use by any Person.
c. Where Goods or Services were purchased to be used by employees for no charge to them and for their personal benefit including the provision of entertainment services, except in the following cases:
1) where it is a legal obligation to provide those Services or Goods to those employees under any applicable labour law in the State or Designated Zone.
2) it is a contractual obligation or documented policy to provide those services or goods to those employees in order that they may perform their role and it can be proven to be normal business practice in the course of employing those people;
3) where the provision of goods or services is a deemed supply under the provisions as specified under the UAE VAT Law and rules & regulations made the there under from time to time
When a A motor vehicle shall not be treated as being available for private use as specified under UAE VAT Law ?
A motor vehicle shall not be treated as being available for private use as specified under UAE VAT Law if it is within any of the following categories:
a. a taxi licensed by the competent authority within the State;
b. a motor vehicle registered as, and used for purposes of an emergency vehicle, including by police, fire, ambulance, or similar emergency service;
c. a vehicle which is used in a vehicle rental business where it is rented to a customer.
A motor vehicle shall not be treated as being available for private use as specified under UAE VAT Law if it is within any of the following categories:
a. a taxi licensed by the competent authority within the State;
b. a motor vehicle registered as, and used for purposes of an emergency vehicle, including by police, fire, ambulance, or similar emergency service;
c. a vehicle which is used in a vehicle rental business where it is rented to a customer.
What is entertainment services as specified under UAE VAT Law ?
Entertainment services” shall mean hospitality of any kind, including the provision of accommodation, food and drinks which are not provided in a normal course of a meeting, access to shows or events, or trips provided for the purposes of pleasure or entertainment.
Provision of catering and accommodation services shall not be treated as entertainment services where it is provided by a transportation service operator, such as an airline, to passengers who have been delayed.
What is Motor Vehicle as specified under UAE VAT Law ?
The phrase “motor vehicle” shall mean a road vehicle which is designed or adapted for the conveyance of no more than 10 people including the driver. A motor vehicle shall exclude a truck, forklift, hoist or other similar vehicle.
Entertainment services” shall mean hospitality of any kind, including the provision of accommodation, food and drinks which are not provided in a normal course of a meeting, access to shows or events, or trips provided for the purposes of pleasure or entertainment.
Provision of catering and accommodation services shall not be treated as entertainment services where it is provided by a transportation service operator, such as an airline, to passengers who have been delayed.
What is Motor Vehicle as specified under UAE VAT Law ?
The phrase “motor vehicle” shall mean a road vehicle which is designed or adapted for the conveyance of no more than 10 people including the driver. A motor vehicle shall exclude a truck, forklift, hoist or other similar vehicle.
Important concepts in relation to Supplies not eligible for input tax recovery under UAE VAT:
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.
