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UAE Input VAT Recovery Guide

Maximize your VAT refunds by understanding what you can and cannot claim.

What is Input VAT?

Input VAT is the VAT you pay when purchasing goods and services for your business. As a VAT-registered business, you can recover (claim back) input VAT on most business-related expenses, reducing your net VAT payable to the FTA.

Basic Formula

Net VAT = Output VAT (collected on sales) - Input VAT (paid on purchases)

If input VAT exceeds output VAT, you can claim a refund from the FTA.

Conditions for Input VAT Recovery

To recover input VAT, all of the following must be met:

You are registered for VAT
The expense is for business purposes
The supplier charged you VAT correctly
You have a valid tax invoice as evidence
The expense is used for making taxable supplies

Expenses You CAN Recover VAT On

Fully Recoverable

  • • Office rent (commercial property)
  • • Equipment and machinery
  • • Raw materials and inventory
  • • Professional services (legal, accounting)
  • • Marketing and advertising
  • • IT equipment and software
  • • Office supplies and furniture
  • • Utilities (electricity, water, internet)
  • • Business travel and accommodation

Partially Recoverable

  • • Mixed-use vehicles (based on business use %)
  • • Mobile phones used partially for business
  • • Home office expenses (proportional)
  • • Staff welfare with some personal benefit

Expenses You CANNOT Recover VAT On

Blocked Input VAT

Entertainment expenses (dining, events for clients)
Motor vehicles available for personal use (unless for resale, rental, or taxi)
Goods and services used for exempt supplies
Purchases for non-business purposes
Goods or services purchased before VAT registration
Expenses without proper tax invoices

Apportionment: Mixed Supplies

If your business makes both taxable and exempt supplies, you cannot recover all input VAT. Instead, you must apportion based on the ratio of taxable to total supplies.

Standard Method

The standard apportionment formula is:

Recoverable % = Taxable Supplies ÷ (Taxable + Exempt Supplies) × 100

Example

A property company with AED 1 million in commercial rent (taxable) and AED 500,000 in residential rent (exempt):

  • Recovery ratio: 1,000,000 ÷ 1,500,000 = 66.67%
  • If input VAT is AED 50,000, recoverable amount is AED 33,335

Capital Assets Scheme

For capital assets (property, equipment over AED 5 million), input VAT recovery must be adjusted over the asset's life if the use changes:

  • Real estate: 10-year adjustment period
  • Other capital assets: 5-year adjustment period

How to Claim Input VAT

  1. Collect valid tax invoices with correct TRN and VAT details
  2. Categorize expenses as fully recoverable, partially recoverable, or blocked
  3. Calculate the recoverable amount with apportionment if needed
  4. Report in Box 10 of your VAT return
  5. Keep records for 5 years (15 years for real estate)

Claiming Refunds

If your input VAT exceeds output VAT, you have a VAT credit. You can:

  • Carry forward: Apply to future VAT periods (automatic)
  • Claim refund: Request cash refund through EmaraTax

Refunds are typically processed within 20 business days, though the FTA may request additional documentation.

Common Mistakes in Input VAT Recovery

  • Claiming VAT without valid tax invoices
  • Claiming entertainment expenses
  • Not apportioning for mixed supplies
  • Claiming VAT on employee personal benefits
  • Accepting invoices with incorrect TRNs
  • Missing the claim deadline (VAT returns are cumulative)

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Related Resources

Tax Invoice Requirements

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