UAE Input VAT Recovery in 2026: Most Businesses Under-Claim, and the Ones That Over-Claim Get Penalised for the Same Reason

UAE VAT is 5%, and registration becomes mandatory once your taxable supplies and imports exceed AED 375,000, with voluntary registration available above AED 187,500 of taxable supplies, imports or taxable expenses [1]. Every registered business knows those numbers, because they are what got it into the system.

Here is the number nobody quotes. A UAE company with AED 2,000,000 of annual local costs carrying VAT is sitting on AED 100,000 of input tax a year. That is not a rebate or a scheme. Where the costs relate to making taxable supplies, that money is a credit against what you owe, and the mechanism to get it back is the same return you already file.

Most businesses recover some of it. Very few recover all of it, and almost nobody has ever checked. The return gets treated as a payment exercise, the input tax box gets filled from whatever the bookkeeping software labelled as input tax, and whether that label was right is never asked in either direction. Both directions cost money. Under-recover and you donate margin quarter after quarter with no error message. Over-recover, by claiming on a blocked category or an invoice that does not qualify, and you have understated your liability, which is a different kind of problem entirely.

Since 2013, BusinessDubai.ae has registered companies across UAE free zones and the mainland and handled the tax registrations and filings that follow. This guide covers what makes input VAT recoverable, where recovery is blocked, why claims fail on paperwork rather than principle, and what to ask a tax adviser. It is a guide, not tax advice, and the statutory detail sits in the VAT law and its Executive Regulations rather than in any article [2].

What is input tax recovery, and why does so much of it go unclaimed?

Short answer: input tax is the VAT you paid on your own purchases, claimed back on your return by offsetting it against the VAT you collected. It goes unclaimed because nobody in the business owns the question.

VAT works as a chain. You charge 5% on what you sell, which is output tax. Your suppliers charge you 5% on what you buy, which is input tax. On the return you declare both and pay the difference, and if input exceeds output you are in a credit position rather than a payable one.

The two bottom rows are the subject of this article. Three things cause them. Finance functions are measured on getting the payment made, which has a visible deadline, while recovering every dirham has none. Bookkeeping codes decide the outcome and nobody reviews the codes, so a category mapped as non-recoverable in year one keeps producing that result forever. And faced with an unclear item, the safe-feeling instinct is not to claim it.

Real Talk: In the books we see, the under-recovered and over-recovered items sit side by side in the same ledger. A business that never reviewed its input tax has usually failed to claim VAT on genuine costs while happily claiming it on staff entertainment. Both errors share a root cause: the expense categories were never mapped to a VAT treatment by anyone who understood VAT.

If you are not yet registered, the input tax side is the entire argument for voluntary registration above AED 187,500 of taxable supplies, imports or taxable expenses [1]. For a business with heavy local costs and business customers it is the difference between absorbing 5% on everything you buy and recovering it. Our VAT registration and compliance guide covers the mechanics.

What actually makes input VAT recoverable?

Short answer: the cost has to relate to making taxable supplies, and you have to hold the right document. Everything else here refines those two conditions.

Strip away the detail and input tax recovery rests on one idea. VAT is a tax on final consumption. A business in the middle of the chain is not the final consumer, so it should not bear the tax on its inputs. It gets relief by recovering the VAT it paid, provided what it bought was used to make supplies that are themselves within the taxable system.

That last clause is where the whole subject lives. "Taxable supplies" includes both standard-rated supplies at 5% and zero-rated supplies at 0%. Both carry the right to recover input tax on related costs, which is precisely why zero-rating is such a favourable outcome, covered in full in our guide to zero-rated exported services. Exempt supplies are a different category. They are not taxable supplies, so costs relating to them do not carry the same entitlement.

Common Mistake: Reading "recoverable if it relates to taxable supplies" as "recoverable if it is a business expense." A genuine, properly documented, wholly business cost can still be non-recoverable if what it supports is exempt activity, or if it falls into a blocked category. Business purpose is necessary and not sufficient.

The practical version is a question you ask of each cost: what did this purchase help me sell? If the answer is "the taxable services we invoice for", you are on the recoverable side. If it is "the exempt part of what we do" or "nothing, it was personal", you are not. If it is "both", you have an apportionment question.

Not sure which side of that line your main cost categories fall on? Talk to a setup expert→

What happens if you make both taxable and exempt supplies?

Short answer: you cannot recover everything and you cannot recover nothing. You attribute costs, and the leftovers get apportioned.

This is the situation that turns input tax from an administrative task into a technical one, and a surprising number of UAE businesses are in it without realising. The logic follows from the entitlement test. If input tax is recoverable because it relates to taxable supplies, a business making some taxable and some exempt supplies has three kinds of cost, not one.

Costs relating wholly to taxable supplies. Recoverable in the normal way. Think of a cost you would not incur at all if you stopped the taxable side.

Costs relating wholly to exempt supplies. These do not carry the same entitlement. If you would not incur the cost but for the exempt activity, it belongs here.

Costs relating to both, or to the business as a whole. Rent on the office everyone sits in. The audit fee. The accounting software. The licence. Nobody can honestly say these belong entirely to one side. These are the residual costs, and they get apportioned.

Pro Tip: Do the attribution exercise before you worry about the apportionment method. Most businesses find that most of their cost base attributes cleanly to one side, and the residual pot they were dreading is smaller than feared. Attribution is bookkeeping discipline. Apportionment is the technical question for an adviser. Doing them in the wrong order makes an ordinary job feel impossible.

How does apportionment actually work?

Short answer: it produces a recoverable percentage for your residual costs, based on a method that has to fairly reflect how those costs were used. We are not publishing a formula, because the method that applies to you is a question of fact and approval, not a sum you copy from an article.

Here is where most content on this subject becomes actively dangerous. It is easy to find articles that hand you a confident formula, present it as the UAE rule, and let you build a recovery position on it. The reality is that apportionment sits in the VAT legislation and its Executive Regulations [2], that there is a standard basis, and that businesses whose circumstances are not fairly reflected by it can seek an alternative. The conditions and approvals involved turn on your facts.

So take the concept rather than a formula. The principle is fair reflection: whatever method applies has to fairly reflect the extent to which your residual costs were used to make taxable supplies, and a method that produces a flattering number without describing your business is a guess with arithmetic attached. The result is a percentage applied to a pot, and only the residual pot, so if you have attributed carefully the percentage is doing less work than you think. It is a live calculation, not a one-off decision, because a business whose exempt activity grows from a rounding error to a quarter of revenue has a materially different position on the same cost categories.

Quick Math: Take a business with AED 3,000,000 of annual costs carrying VAT, so AED 150,000 of input tax. Say AED 90,000 attributes directly to taxable activity and AED 20,000 directly to exempt, leaving AED 40,000 residual. Between a recoverable percentage of 70% and one of 85%, that residual pot is worth AED 6,000 a year, or AED 18,000 over three years. Now change the attribution instead: move AED 30,000 of that residual into the directly attributed taxable pot by keeping better records, and you have recovered most of the same money without arguing about a percentage. Attribution beats apportionment.

Do not assume apportionment cannot apply to you because you have never heard the word. Businesses drift into partial exemption without a decision being made. A software company that starts referring clients for a fee, a trading business that begins financing customer purchases, a consultancy that acquires a property interest. Nobody announces it, the position changes anyway, and the recovery percentage that was correct at 100% taxable stops being correct. If you sit inside a group of related companies, grouping changes this analysis entirely, because supplies between members fall away. That is a separate decision covered in our guide to UAE VAT group registration.

Which categories are blocked, and why does claiming them cost more than not claiming?

Short answer: entertainment and motor vehicles available for private use are the two blocked categories that catch nearly everyone. Treat them as things to check against the current published rules rather than a list to rely on from any article, including this one.

Some input tax is not recoverable no matter how business-related the spend was. The restrictions sit in the Executive Regulations of the VAT law [2], and two categories account for most real-world problems.

Entertainment and hospitality. The broad idea is that hospitality provided to people who are not your employees performing their role is not recoverable. Client dinners, hosting, event hospitality. Recognised carve-outs exist around simple refreshments during a business meeting and around things an employee needs in order to do their job, and those boundaries are set out in the rules and in FTA clarification material rather than inferred from a blog.

Motor vehicles available for private use. The word doing the work is available. This is not a test of whether the car was driven to the beach at the weekend. A saloon car parked at the office with keys in a drawer is available to someone. Exceptions exist for vehicles not realistically available privately, and a documented pool vehicle policy is a different conversation from an undocumented one, but the default assumption in most small companies is wrong.

Real Talk: We are deliberately not publishing this as a definitive statutory list, and you should be suspicious of any article that does. These categories show up in real books over and over, so they are the right places to look first, but the precise wording and the current position are published by the Federal Tax Authority and sit in the Executive Regulations [2][3]. Check a material category when you make the claim rather than remembering something you read.

Now the part people underestimate. Claiming blocked input tax is not neutral. Under-recovery costs you money quietly and nobody comes after you for it. Over-recovery understates your liability, and correcting it later is a formal process rather than a quiet adjustment, covered in our guide to VAT voluntary disclosure. The two errors do not carry the same consequences, so a review that only hunts for missed claims is doing half the work.

Quick Math: A company claiming VAT on AED 240,000 a year of client entertainment is claiming AED 12,000 a year it may not be entitled to. Over three years that is AED 36,000 of understated liability, before anything else that attaches to it, on a category that a single afternoon of ledger mapping would have separated out permanently.

Why do most input tax claims actually fail?

Short answer: not on the rule, on the paperwork. The most common reason a claim does not survive review is that the tax invoice is missing, incomplete, or in the wrong name.

This is the least interesting section in this article and the one that recovers the most money. Input tax recovery is documentary. The entitlement flows from the supply, but the claim is evidenced by the invoice, and if the document is not right the technical merits may never get examined. Three failure modes account for most of it.

The invoice is in the wrong name. The big one, and entirely avoidable. If the supplier addressed it to a director personally, to a trading name that is not the registered entity, to an old company name after a rebrand, or to a related company in the group, the document does not say what your claim says. Utilities, telecoms, software subscriptions and travel bookings are the usual culprits, set up in a person's name before the company existed and never changed.

There is no tax invoice at all. A quotation, a statement of account, a delivery note, a payment confirmation, a bank line, a card slip and a screenshot are not tax invoices. Card receipts from small suppliers are the most common gap, and expense claims the most common source.

The invoice is missing required content. A valid tax invoice has specified content requirements set out in the Executive Regulations [2], and the supplier's TRN is the one people notice missing. We are not reproducing the list, because it is published by the FTA and by the legislation and you should read it there. What you can do without knowing it by heart is refuse to accept a document that does not look like a proper tax invoice from a registered supplier.

Pro Tip: Run a one-off supplier account audit rather than fixing invoices one at a time. Pull your top forty recurring suppliers by spend, check whose name each account is in, and correct the details at source. Fixing the account fixes every future invoice. Fixing the invoice fixes one. Most suppliers will reissue while the relationship is current, and that window closes with time. Our guide to UAE e-invoicing covers where this is heading.

Want the supplier records, the invoice discipline and the filings handled as one job? Get a free consultation→

Which VAT period does a claim belong in?

Short answer: recovery is period-specific, and "can I just put it in the next return?" is not automatically yes. It is a question with rules attached rather than a matter of convenience.

A late-arriving invoice is an ordinary event, and it is where well-intentioned bookkeeping goes off-piste. The instinct is to drop it into whichever open return is convenient. That instinct is not safe. Three things are true, without inventing the detail.

The claim belongs to a period determined by rules, not preference. The conditions sit in the VAT legislation and its Executive Regulations [2] and connect to when the supply took place, when the tax invoice was received, and the intention to pay for it. Which drives your claim is a question for your adviser and the published rules, not an article.

Limits exist on how long a claim stays available. We are not publishing a period, because we will not put a number in your hands that you then rely on. That the limits exist is the point, and a drawer of unclaimed invoices is not a bank account that keeps earning. Confirm the current position with the Federal Tax Authority or your adviser [3].

Fixing an old period is not the same as adjusting the current one. The boundary between adjusting in the next return and making a formal disclosure matters, and it is covered in our guide to VAT voluntary disclosure. The return mechanics, box by box, sit in our guide to UAE VAT return filing.

The practical consequence is boring and effective. Close your purchase ledger before you file, and chase missing tax invoices ahead of the return rather than after it. Businesses that lose input tax to timing almost never lose it because they misread a rule. They lose it because the invoice sat in somebody's inbox for five months.

Can you recover VAT on costs from before you registered?

Short answer: pre-registration input VAT is real, and it is the question every newly registered company asks, but it comes with conditions and a warning about your first return.

A new UAE company spends money before it has a TRN. Setup costs, professional fees, office deposits, equipment, software, initial stock. Then it registers and somebody asks the obvious question: can we get the VAT back on all of that?

The concept exists. Goods and services acquired before registration can, subject to conditions, be brought into recovery once you are registered, and the conditions differ between goods and services, so confirm rather than assume [2][3]. The practical failure we see is simpler than the technical question: the first VAT return of a newly registered business is not a formality. It is where the pre-registration position is dealt with, and treating it as a warm-up filing to tidy up later makes the tidying significantly harder than doing it properly once.

Pro Tip: If you are forming a company now and expect to register, keep the setup invoices in one folder from day one and get every one issued to the company as soon as it exists. That costs nothing. Reconstructing it eight months later from a founder's card statements costs a professional fee for an uncertain outcome. Our free zone company setup page prices a Dubai free zone package at AED 12,800 for the first year with one visa included, and our mainland company setup page prices the Dubai mainland standard route at AED 18,200, rising to AED 26,355 with one visa. Those are exactly the invoices that need to be in the company's name.

Where does under-recovery actually hide?

Short answer: in the ordinary cost categories nobody looks at twice, and in expense claims.

If you run one review, run it over these places. This is not a list of things you are entitled to claim, because entitlement depends on your facts and the tests above. It is a list of where genuine entitlement is most often missed.

Employee expense claims. The highest-yield area in most companies. Staff pay for things, submit a claim, get reimbursed, and the underlying tax invoice never enters the VAT records because the reimbursement was processed as a payroll or petty cash item. The spend is real, the VAT is real, and the claim never gets made.

Subscriptions, software and costs paid by a related company. Subscriptions are often set up in a founder's personal name before the company had accounts. In group structures, Company A pays and Company B uses, so entitlement and documentation have to line up with whoever is claiming.

Costs coded to the wrong category, and capital purchases. A category mapped as non-recoverable in the chart of accounts produces that result forever, silently. Capital purchases are larger, rarer and often handled outside the normal purchase invoice process, which is the combination that produces gaps.

Imports, credit notes and supplier adjustments. Import VAT and reverse charge mechanics interact with your input tax position, and unprocessed adjustments leave it stale in both directions. The return mechanics sit in our VAT return filing guide, and designated zones add a layer covered in our designated zone VAT guide.

Common Mistake: Running the review as a hunt for missed claims only. A one-directional review finds money and leaves exposure behind, because the same books that under-claim in one category usually over-claim in another. Review both directions in one pass, and take the over-claims to an adviser.

What does under-recovery cost in real money?

Short answer: it scales with your cost base, and at every level below it is larger than the cost of getting the position reviewed properly.

Input tax recovery is arithmetic on the 5% rate [1], so the exposure is easy to size. The table assumes VAT-bearing local costs, which is not total costs, since salaries and many other outgoings carry no VAT.

Five percentage points is conservative. In books never reviewed, the gap is frequently larger, because whole categories are missing rather than a slice of each one.

Quick Math: A business with AED 2,000,000 of VAT-bearing costs that is entirely missing its employee expense claims, where those claims are AED 300,000 a year of spend, leaves AED 15,000 a year on the table from that one category. Over the three years it took to notice, AED 45,000, recovered by nothing more sophisticated than routing expense claims through the purchase ledger with the tax invoices attached. The cost of a proper review is a fixed professional fee. The cost of not doing one is a percentage of your cost base, every year.

Keep Corporate Tax out of this reasoning. It is 0% on taxable income up to AED 375,000 and 9% above, with the return and payment due within nine months of the tax period end [4][5]. Separate registration, separate return, separate analysis, covered in our UAE corporate tax filing guide.

What does a working input tax process look like?

Short answer: three habits, none of them clever, together worth more than any technical insight in this article. Fix the supplier records once, as a project rather than a running repair, so every recurring account is in the company's registered legal name. Refuse any reimbursement without a tax invoice attached, as a rule of the expense policy rather than a preference. And close the purchase ledger before you prepare the return rather than while you prepare it.

Our post-setup services team runs registrations, returns and the record discipline behind them, alongside a tax adviser for the treatment questions. Getting the process right once is cheaper than getting the answer right repeatedly.

What should you ask a tax adviser?

Short answer: ten questions about your actual cost base rather than about input tax in general.

Take these to a qualified UAE tax adviser and ask for the answers in writing, addressed to your business.

1. Do we make any exempt supplies at all, and if so, are we currently applying an apportionment at all?
2. If we are partially exempt, which method applies to us, on what basis, and does it fairly reflect how our costs are used?
3. Which of our cost categories attribute directly to taxable activity, and which are genuinely residual?
4. Which of our current expense categories are blocked, and are we claiming on any of them today?
5. What is our position on vehicles, specifically, and what documentation would support it?
6. What are the tax invoice content requirements we should be checking against, which of our supplier accounts are in the wrong name, and what does that do to claims already made?
7. Which period does a claim belong in on our facts, and what is the current time limit for making one?
8. Do we have unclaimed pre-registration input tax, and is it still available to us?
9. If a review of the last three years finds over-claims as well as under-claims, what is the correct route to fix each?
10. What would you want to see in our records if our input tax were examined in three years?

Question nine is the one people skip and the one that matters most. Finding an over-claim is not a reason to stop looking, it is a reason to take advice on the right way to correct it. Ask questions one and three again whenever your business model changes materially, because new revenue lines arrive with a sales announcement rather than a tax memo.

Want the input tax position reviewed alongside the registration and the filings? Check your eligibility→

Real Client Stories

Real examples from businesses we have helped set up. Names have been changed for privacy.

Rashid, the trading company that never claimed an expense receipt

Rashid ran a general trading company from a Dubai free zone with eleven staff and roughly AED 1,800,000 a year of local costs. Supplier invoices went through the purchase ledger correctly and the returns had never been late. Expense claims were a different system entirely: staff submitted a spreadsheet, finance paid it from the bank, and the receipts went into a folder the VAT process never touched.

The claims ran to about AED 400,000 a year. Nobody had asked what happened to the VAT inside them, because the process worked perfectly at what it was designed to do, which was reimbursing people. The fix was a policy sentence requiring a tax invoice with every claim, and routing claims through the purchase ledger. No technical analysis was involved.

His comment: "We had a compliant VAT process and a completely separate expenses process, and nobody had ever noticed they were supposed to be the same process."

Meera, the consultancy that was quietly partially exempt

Meera's advisory firm billed standard-rated consultancy for four years and recovered its input tax on that basis, correctly. Two years in, it started earning introduction fees from a financial partner. The revenue was small at first, then it was not small.

Nobody connected a new revenue line to a change in the VAT recovery position, because no system asks that question. By the time it surfaced during a review, the recovery percentage being applied to office rent, audit fees and software had been describing a business the firm no longer was. The correction went to an adviser, and the outcome was a documented method going forward.

Her comment: "I thought partial exemption was something that happened to banks and insurers. It happened to us because we added a referral fee."

Tom, the founder whose invoices were all in his own name

Tom set up a mainland company and ran it hard for two years before anyone looked at the VAT records in detail. Software subscriptions, mobile accounts, the co-working membership from before the office, domain and hosting, design tools and two years of business travel had all been booked on his personal card in his personal name, because that is how they were set up before the company existed and nobody changed the account details afterwards.

The spend was entirely genuine and entirely business. The documents did not say so. Roughly two thirds of the recurring suppliers reissued on request, and the account details were fixed at source so it could not recur. The rest were older, smaller and gone.

His comment: "None of it was a tax question. It was an admin question that had been sitting there for two years pretending to be a tax question."

Get your input tax position reviewed before it costs another year

Input tax is the half of UAE VAT that gets no attention, because nothing goes wrong when you get it wrong. The return files, the payment clears, the system says nothing. Under-recovery has no error message, and neither does over-recovery, right up until somebody reviews it.

The sequence that works is unglamorous. Establish whether you make any exempt supplies at all, because that determines whether you have an apportionment question. Attribute costs directly wherever you can, because attribution beats apportionment. Separate the blocked categories out of the ledger permanently, entertainment and vehicles first. Fix your supplier accounts so invoices arrive in the right name. Close the purchase ledger before you file. Then take the residual technical questions to an adviser, in writing, about your actual costs.

At AED 2,000,000 of VAT-bearing annual costs, five percentage points of under-recovery is AED 5,000 a year and AED 15,000 over three [1]. A review costs less than that at almost every size of business, and it finds the problems in both directions rather than only the flattering one.

Since 2013, BusinessDubai.ae has registered companies across UAE free zones and the mainland. Our post-setup services team runs VAT registration, returns and the record discipline that makes recovery routine. If you are still choosing a base, our free zone company setup page prices a Dubai free zone package at AED 12,800 for the first year with one visa included, our mainland company setup page prices Dubai mainland at AED 18,200, our business setup in Sharjah page covers licences from around AED 5,750, and our offshore company formation page covers structures that hold rather than trade.

Get a free consultation→

Frequently Asked Questions

What is input tax in UAE VAT?

Input tax is the VAT you paid on your own business purchases and imports. Output tax is the VAT you charged customers. On your return you declare both and pay the difference, so recoverable input tax reduces what you hand over.

Can I recover all the VAT I pay on business costs?

Not automatically. Recovery generally requires that the cost relates to making taxable supplies, that it is not in a blocked category, and that you hold a valid tax invoice. A genuine business expense can still fail one of those tests.

Are zero-rated supplies treated the same as exempt supplies for input tax?

No, and this is the most valuable distinction in UAE VAT. Zero-rated supplies are taxable supplies at 0%, so input tax on related costs is recoverable. Exempt supplies are not taxable supplies and do not carry the same entitlement. Our zero-rated exported services guide covers the difference.

What is input tax apportionment?

It applies when costs support both taxable and exempt activity. Costs attributed directly to one side are treated accordingly, and the residual costs supporting both are apportioned to produce a recoverable proportion.

Is there a standard apportionment formula I can use?

Do not take a formula from an article. The basis sits in the VAT legislation and its Executive Regulations, with provision for businesses whose circumstances are not fairly reflected by the standard basis to seek an alternative [2]. Confirm your method with a tax adviser and the FTA [3].

How do I know if I am partially exempt?

Start by identifying whether any part of your revenue is exempt rather than taxable. Businesses drift into this position when they add a revenue line, and nothing announces it. If you are not certain, that uncertainty is the answer to take to an adviser.

Can I recover VAT on client entertainment?

Generally no. Entertainment and hospitality provided to people other than employees performing their role is a blocked category, with recognised carve-outs around things like simple refreshments at a business meeting. Check the current published position before claiming [2][3].

Can I recover VAT on a company car?

Not where the vehicle is available for private use, which is a test of availability rather than actual private use. Genuine exceptions exist for certain categories of vehicle. Document any restriction on availability before you claim rather than after.

Why do input tax claims get rejected?

Most often for a documentary reason rather than a technical one. The tax invoice is missing, is not a tax invoice, is incomplete, or is addressed to someone other than the entity claiming.

Does the invoice have to be in my company's name?

That is the practical position to work to. Invoices addressed to a director personally, to a former company name or to a related entity do not say what your claim says. Get them reissued and fix the supplier account at source so it cannot recur.

Which VAT return period does a claim belong in?

It is determined by rules connected to when the supply took place and when you received the tax invoice, not by which return is convenient [2]. Confirm the position for your facts with your adviser.

Is there a time limit for recovering input tax?

Limits exist. We are not publishing a period, because you should confirm the current position with the FTA or your adviser rather than rely on an article [3]. Either way, a drawer of unclaimed invoices is losing value.

Can I claim an old invoice in this quarter's return?

Sometimes, and sometimes not. The difference between a permitted adjustment and a correction requiring formal disclosure matters, and our VAT voluntary disclosure guide covers where that line falls.

Can I recover VAT on costs incurred before I registered?

Pre-registration input tax exists as a concept, subject to conditions that differ between goods and services [2]. The practical warning is that your first VAT return is where this is dealt with, so do not treat that return as a formality.

Should I register for VAT voluntarily to recover input tax?

It can be the right call where you have meaningful VAT-bearing costs and business customers. Voluntary registration is available above AED 187,500 of taxable supplies, imports or taxable expenses [1]. Weigh the recovery against the ongoing cost of filing.

Do I recover input tax if all my sales are zero-rated exports?

Yes, because zero-rated supplies are taxable supplies. A business in that position is often in a permanent credit position with the FTA, which raises a separate question about refund versus carry forward.

What happens if my input tax is bigger than my output tax?

You are in a credit position and you choose between requesting a refund and carrying the credit forward. The mechanics sit in our VAT return filing guide and our VAT credit and refund guide.

What if I have been over-claiming input tax?

Take it to an adviser before deciding what to do. Correcting an understated liability is a formal process rather than a quiet adjustment in the next return, and the route depends on the size and nature of the error.

Does being in a VAT group change my input tax position?

Yes, substantially, because supplies between members are disregarded and the group is treated as one taxable person. Eligibility and the trade-offs are covered in our VAT group registration guide.

Is VAT on my office rent recoverable?

Commercial rent is standard-rated, and where you are registered and making taxable supplies the VAT on it is generally recoverable on the same tests as any other cost. Our UAE VAT on commercial property guide covers the classification side.

What is the single biggest input tax mistake?

Not knowing which of the two directions you are wrong in. Businesses that have never reviewed their input tax are usually under-claiming in some categories and over-claiming in others at the same time.

Related reading: UAE VAT Return Filing, Zero-Rated Exported Services, UAE VAT Voluntary Disclosure, UAE VAT on Commercial Property

References

[1] Federal Tax Authority. Registration for VAT, setting the standard rate at 5%, the mandatory threshold at AED 375,000 of taxable supplies and imports, and the voluntary threshold at AED 187,500 of taxable supplies, imports or taxable expenses. FTA VAT registration

[2] Federal Decree-Law No. 8 of 2017 on Value Added Tax and its Executive Regulations, Cabinet Decision No. 52 of 2017. These contain the input tax recovery conditions, the apportionment provisions, the restrictions on entertainment and on motor vehicles available for private use, the tax invoice content requirements and the pre-registration conditions. This article describes their shape rather than reproducing their text. Ministry of Finance financial legislation

[3] Federal Tax Authority. Published VAT guidance, public clarifications and frequently asked questions, being the authority's current statements on input tax recovery, blocked categories and tax invoice requirements. Check here when you make a claim rather than relying on any summary, including this one. FTA VAT FAQ

[4] The Official Portal of the UAE Government. Corporate tax at 0% on taxable income up to AED 375,000 and 9% above, a separate regime from VAT. u.ae corporate tax

[5] Federal Tax Authority. Corporate tax returns and settlement of liabilities due within nine months from the end of the tax period. FTA news release

[6] BusinessDubai.ae. Internal data from UAE company registrations and post-setup tax compliance work since 2013, including input tax reviews, the supplier invoice naming problem and the expense claim gap. businessdubai.ae