When can input VAT be recovered in the UAE?
In the first tax period when the conditions in Article 55 of the VAT Decree-Law are met: the business holds a valid tax invoice, has paid the consideration or part of it as the Executive Regulation specifies, and holds any required electronic invoice. Under Article 54, the cost must be used for taxable supplies.
If the period is missed
Article 55 allows recoverable input VAT not claimed in the first eligible period to be claimed in the next tax period's return.
What cannot be recovered
VAT on costs used for exempt supplies, such as residential rent after the first supply or bare land, is not recoverable. The Executive Regulation lists other blocked costs. Partly exempt businesses apportion.
How SupaJack Construct helps
Supplier bills record the VAT and the supplier's TRN, and the recoverable VAT flows into the VAT return box for recoverable tax, so the return figure traces to the bills that make it up.
Related tools and guides
See the VAT guide for contractors, the VAT calculator, the payment certificate calculator, the retention calculator, finance and VAT in SupaJack Construct, the answer on whether a payment certificate triggers VAT and the meaning of e-invoicing.
Worked example
A contractor receives a supplier's tax invoice for rebar on 10 May with AED 12,000 VAT and pays it on 20 May. Both conditions are met in the April to June period, so it recovers the AED 12,000 in that return. If it forgets, it can claim it in the July to September return.
Questions people ask
Is a tax invoice required?
Yes, or another document allowed by Article 65.
Must the supplier be paid first?
Article 55 now includes paying the consideration, as the Executive Regulation specifies.
Can late claims be made?
In the following tax period under Article 55.