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UAE Sets Out COVID-19 VAT Input Tax Recovery Rules

by Lorys Charalambous, Tax-News.com, Cyprus

31 July 2020


The United Arab Emirates Federal Tax Authority has released a statement clarifying value-added tax input tax recovery for COVID-19-related expenses.

The statement follows an online virtual workshop for tax agents. During the workshop, the FTA clarified the criteria and procedures for recovering input tax incurred for specific expenses, including those related to the COVID-19 pandemic, marketing and entertainment expenses, vehicle expenses, and events "beyond taxation control."

The Authority clarified that with regard to the expenses associated with COVID-19, such as sterilizing workplaces and the testing of employees, these are considered general expenses. The FTA stated: "Input tax is recoverable in the event that the supplies and services made by the business are themselves taxable. In the event that the business is making taxable supplies only, the input tax is fully refundable. However, in the event that the business is making taxable and tax-exempt supplies, the input tax will be partially refundable." The FTA also stated that input tax cannot be recovered on the expenses of testing employees' families unless the employee bears the cost.

TAGS: United Arab Emirates | tax | business | value added tax (VAT) | employees | services | Tax

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