UAE Input Tax Challenges and Place of Supply Determinants

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In this article we will be shedding light on non-recoverable input tax and the intricacies surrounding the determination of the place of supply. Navigating these aspects is pivotal for businesses aiming to optimize VAT efficiency and compliance.

1) Non-recoverable Input Tax: -

The following VAT is not recoverable against VAT on taxable supplies:

a) Where a motor vehicle was purchased, rented, or leased for use in the Business and is available for personal use by any Person.

b) Provision of entertainment to anyone not employed by the Person, including customers, potential customers, officials, shareholders, or other owners or investors of the Person.

c) Where Goods or Services were purchased to be used by employees for no charge to them and their benefit including the provision of entertainment, except in the following cases:

i) where it is a legal obligation to provide those Services or Goods to those employees under any applicable labor law in the State or Designated Zone;

ii) it is a contractual obligation or documented policy to provide those services or goods to those employees so that they may perform their role and it can be proven to be normal business practice in the course of employing those people;

iii) where the provision of goods or services is a deemed supply under the provisions of the Decree-Law.

2) Place of Supply: -

a) For real estate, a supply is deemed to take place in UAE where the services are directly connected with UAE real estate.

b) Domestic transport services are deemed to be supplied from the place where the transport commences.

c) For goods transported to another GCC State that has implemented VAT (‘implementing state), the place of supply is the destination provided adequate proof of transportation can be obtained. 

Disclaimer: Content posted is for informational and knowledge sharing purposes only, and is not intended to be a substitute for professional advice related to tax, finance or accounting. The view/interpretation of the publisher is based on the available Law, guidelines and information. Each reader should take due professional care before you act after reading the contents of that article/post. No warranty whatsoever is made that any of the articles are accurate and is not intended to provide, and should not be relied on for tax or accounting advice.