If your business is registered for VAT in the UAE, you’re likely paying VAT on purchases, office supplies, software, and other business-related expenses. The good news? You can recover that VAT as input VAT, reducing your overall tax liability and improving cash flow.
How Businesses Can Reclaim VAT in UAE
If your business is registered for VAT in the UAE, you’re likely paying VAT on purchases, office supplies, software, and other business-related expenses. The good news? You can recover that VAT as input VAT, reducing your overall tax liability and improving cash flow.
Input VAT recovery might sound complicated, but with the right approach, it’s straightforward and fully legal. Let’s break it down step by step. If you haven’t registered yet, see our guide: VAT Registration Services in Dubai.
How Input VAT Recovery Works
- Understand Input VAT
- Input VAT is the VAT your business pays on goods and services purchased for business use.
- Example: Buying office furniture for your registered business at AED 10,000 + AED 500 VAT → the AED 500 is input VAT you can claim.
- Check Eligibility
- Only expenses related to taxable business activities qualify.
- Exclusions include entertainment for non-employees, personal expenses, or VAT on exempt supplies.
- Keep Valid Invoices
- Your supplier invoice must include:
- Supplier’s TRN
- Your TRN (as buyer)
- Invoice number and date
- VAT amount clearly stated
- Record and Document Everything
- Maintain invoices and receipts for at least 5 years (FTA requirement).
- Keep digital copies for easier filing and auditing.
- Claim VAT on Your Return
- Include your input VAT in your VAT return.
- The FTA will offset input VAT against the output VAT you collected.
- If input VAT > output VAT, you may be eligible for a refund.
- Avoid Common Mistakes
- Claiming VAT on personal expenses
- Using invoices with missing key details
- Failing to file returns on time
- Learn how to file VAT returns: How to File VAT Returns in Dubai.
Recovering input VAT is a powerful tool for UAE businesses to save money and improve cash flow. By keeping proper invoices, recording all business expenses, and filing VAT returns accurately, your business can reclaim VAT with confidence.
- VAT registration: VAT Registration Services in UAE
- Filing VAT returns: How to File VAT Returns in Dubai
- Professional assistance: Top VAT Consultant – Mehar Business Solution LLC
FAQs – Input VAT Recovery in UAE
Q.1 What is input VAT?
Input VAT is the VAT you pay on purchases for your business. Businesses can reclaim it against VAT collected on sales (output VAT).
Q.2 Which expenses qualify for input VAT recovery?
Expenses must be:
- Related to taxable business activities
- Supported by valid VAT invoices
- Common examples: office supplies, software, rent for business premises, professional fees, and imported goods used for taxable business activities.
Q.3 Can I recover VAT on imports?
- Yes, VAT on imported goods and services can generally be reclaimed if used for taxable business purposes.
- How do I claim input VAT?
- Input VAT is claimed through your VAT return filed with the FTA. The system automatically offsets input VAT against output VAT.
Q.4 What if my input VAT is higher than my output VAT?
You may be eligible for a VAT refund from the FTA. This improves your cash flow.
Q.5 Can I claim VAT for exempt supplies?
No. VAT paid on purchases used for exempt supplies cannot be reclaimed.
Q.6 How long should I keep invoices and records?
The FTA requires records and invoices to be kept for at least 5 years for audit and verification purposes.
Q.7 Do I need a consultant to reclaim input VAT?
Not required, but a VAT consultant can ensure all claims are valid, maximize recovery, and prevent mistakes that could trigger fines. (Mehar Business Solution LLC)
