Output VAT
The 5% VAT you charge on your own taxable sales and services. You collect it from customers and pass it to the FTA through your return.
Claim what you are owed
Input VAT Recovery in the UAE
Every VAT-registered business in the UAE pays 5% VAT on its purchases. Much of that VAT is not a cost at all: it is recoverable input tax that comes back to you through your VAT return. This guide explains what input VAT is, the five conditions the FTA applies before you can reclaim it, the items that are blocked, how apportionment works when you make exempt supplies, and the documents you need to keep.
5% VAT paidOn most business purchases, rent and imports
RecoverableWhen the five FTA conditions are met
Valid TRN invoiceThe document the FTA checks first
Figures last verified: 16 October 2026.
The basics
What input VAT actually is
A VAT return has two sides. Most businesses understand the first, the VAT they charge customers. The second side is where the savings sit.
Input VAT
The 5% VAT your suppliers charge you on business purchases, office rent, stock, equipment, professional fees and imports. This is the VAT you can potentially reclaim.
Net VAT payable
Output VAT minus recoverable input VAT. That net figure is what you pay the FTA each tax period. Recover your input VAT correctly and your quarterly bill falls.
Input VAT only exists for VAT-registered businesses. If you are not registered and hold no TRN, the VAT on your purchases is simply a cost, it cannot be recovered. Check whether you should be registered.
The five conditions
When you can recover input VAT
The FTA allows recovery only when all five conditions hold. Miss one and the claim fails:
- You are VAT-registered. You hold a TRN and the expense relates to a period in which you were registered.
- The purchase supports taxable supplies. The goods or services are used to make supplies that carry VAT, at 5% or zero-rated. Costs tied to exempt supplies are treated differently (see apportionment below).
- You hold a valid tax invoice. It shows the supplier's TRN, a sequential invoice number, the date, a description, and the VAT charged. Without this document, the FTA will disallow the claim.
- The VAT was paid or incurred. The purchase genuinely happened and the VAT is due. You cannot claim on a proforma invoice or a quote.
- You claim it in the right tax period. Input VAT belongs to the period in which it was incurred, or the immediately following period. The window does not stay open beyond that.
Our VAT services team runs these checks on every return before filing, so nothing unrecoverable slips in and nothing recoverable is left behind.
Blocked by law
What you cannot recover
Even when all five conditions are met, some categories of spending are blocked from recovery by the VAT law. These three catch the most businesses.
Entertainment expenses
VAT on client dinners, hospitality, event tickets and staff parties is not recoverable. The FTA treats entertainment as private consumption, even when the business purpose is genuine. If the invoice says "dinner", "hospitality" or "event", leave the VAT out of your return.
Motor vehicles for private use
VAT on buying, leasing or renting a car is blocked when the vehicle is available for private use. The narrow exceptions cover vehicles used directly in a taxable activity with no private use, such as taxis, car-hire fleets and commercial delivery vehicles. A director's company car does not qualify.
Personal and employee benefits
VAT on goods and services provided to employees or owners for their personal benefit cannot be recovered. That includes staff gifts above token value, personal travel, and perks that are not a normal cost of running the business.
Mixed supplies
Apportionment, when you make exempt supplies too
Some income is exempt from VAT, such as residential property rental and certain financial services. When your costs support both taxable and exempt income, you can only recover the slice that belongs to the taxable side.
How the standard apportionment method works
Take your total taxable supplies and divide them by your total supplies (taxable plus exempt) for the period. That ratio is your recovery percentage. Multiply your mixed-use input VAT by that percentage to get the recoverable amount.
Example: a Dubai firm earns AED 800,000 from taxable consulting and AED 200,000 from exempt residential rental in a quarter. Recovery ratio: 800,000 / 1,000,000 = 80%. Shared office costs carried AED 10,000 of input VAT, so AED 8,000 is recoverable and AED 2,000 is not.
At the end of your tax year, run an annual wash-up: recalculate the ratio using full-year figures and adjust the final return of the year for any difference. Costs that relate only to taxable supplies are recovered in full; costs that relate only to exempt supplies are not recovered at all.
Apportionment is one of the first things the FTA reviews in an audit. Book a Free Finance Review and we will check your method before the FTA does.
Timing
Claim it in the right period
Input VAT has a short shelf life. The window opens and closes faster than most businesses expect.
Period incurred
The default home for input VAT is the tax period in which you incurred it, normally the period of the tax invoice date. Match the claim to the invoice, not to the payment date.
The next period is allowed
If an invoice arrives late, you may claim the input VAT in the immediately following tax period. That is the full extent of the grace, the window does not stay open longer.
Missed it? Disclose it
If a recoverable claim was left off a filed return, correct it with a voluntary disclosure to the FTA. You do not quietly add old input VAT to a later return, the FTA treats that as an incorrect filing.
Keep records 5 years
Every invoice, receipt and import declaration behind your claims must be kept for five years after the end of the relevant tax period. If the FTA cannot see the document, the claim fails.
Evidence
The documents the FTA wants to see
Recovery is only as strong as its paperwork. For every claim, keep:
- A valid tax invoice showing the supplier's TRN, your TRN, a unique invoice number, the date of issue, a clear description of the goods or services, and the VAT amount charged separately.
- Proof of payment, bank transfer records, card receipts or stamped payment vouchers that tie the invoice to money actually leaving your account.
- Customs import declarations for input VAT paid on imports, the bill of entry is your tax invoice equivalent at the border.
- Contracts and delivery notes where the link between the purchase and your taxable activity is not obvious from the invoice alone.
- Apportionment workings, if you recover a proportion of mixed-use input VAT, keep the calculation and the figures behind it for the FTA to review.
Simplified tax invoices are acceptable for retail-style purchases under AED 10,000, but they must still show the supplier's TRN and the VAT charged. Our bookkeeping team files all of this monthly, so an FTA query never becomes a scramble.
Worked example
Input VAT recovery, in dirhams
A Dubai consultancy, one quarter, all figures in AED. Watch how blocked items and the five conditions change the final bill.
A worked example: Dana Consulting, a quarter in Dubai
(A hypothetical example to show the calculation.) Output VAT on client fees: AED 200,000 of taxable sales at 5% = AED 10,000 collected from clients.
Input VAT on the quarter's costs: stock and materials AED 60,000 (VAT 3,000), office rent AED 20,000 (VAT 1,000), professional fees AED 10,000 (VAT 500). A client dinner of AED 4,000 carried AED 200 of VAT, but entertainment is blocked, so it is excluded. Recoverable input VAT = 3,000 + 1,000 + 500 = AED 4,500.
Net VAT payable to the FTA: 10,000 minus 4,500 = AED 5,500. Without proper recovery the bill would have been AED 10,000; with blocked items wrongly claimed, an audit adjustment plus penalties would follow. Getting the two sides right is worth real money every quarter.
Avoid these
Mistakes that trigger FTA queries
Claiming entertainment VAT
The single most common disallowance. Client dinners, hospitality and events look like business costs, but their VAT is blocked by law and the FTA removes it on sight.
Invoices without a TRN
A supplier quote, a proforma, or an invoice with no TRN is not a tax invoice. Claiming VAT from documents that do not qualify is an easy audit hit.
VAT on the company car
If the vehicle is available for private use, its VAT is blocked. Businesses reclaim it anyway, then lose it in review with a penalty attached.
Claiming in the wrong period
Old input VAT quietly added to a current return is an incorrect filing. The correct route for a missed claim is a voluntary disclosure.
Skipping apportionment
Recovering 100% of input VAT while earning exempt income is a red flag. Mixed-use costs need a documented recovery ratio, recalculated in the annual wash-up.
Weak or missing records
Claims with no invoices, no payment proof and no workings behind them collapse the moment the FTA asks questions. Five-year retention is the rule.
Next steps
Recover everything you are entitled to
Input VAT recovery is one moving part of your VAT position. Our complete UAE VAT guide puts it in full context, from registration to refunds. When your input VAT exceeds your output VAT for a period, you may be owed money back, our VAT refunds guide explains that process, and our VAT services team from Dubai handles returns, apportionment and FTA correspondence end to end.
Browse the full resources library, or talk to us directly:
- WhatsApp: Chat with us
- Email: [email protected]
- Free Finance Review: book a slot and we will review your last quarter's input VAT claims at no cost.
Input VAT FAQs
Questions about input VAT recovery
What counts as input VAT in the UAE?
Input VAT is the 5% VAT charged to you on business purchases: stock, equipment, office rent, professional fees, utilities and imports. If you are VAT-registered and the purchase supports your taxable supplies, that VAT is generally recoverable through your VAT return.
Can I recover VAT on client dinners and entertainment?
No. VAT on entertainment, hospitality and client dinners is blocked from recovery under UAE VAT law, even when the spending has a genuine business purpose. The FTA disallows these claims on sight, so leave them out of your return.
Can I reclaim VAT on a company car?
Only in narrow cases. VAT on a motor vehicle is blocked when the vehicle is available for private use. The exceptions cover vehicles used directly in a taxable activity with no private use, such as taxis, car-hire fleets and commercial delivery vehicles. A director's company car does not qualify.
I make both taxable and exempt supplies. How much input VAT can I claim?
You must apportion. Costs used only for taxable supplies are recovered in full; costs used only for exempt supplies are not recovered at all. For mixed-use costs, apply the standard recovery ratio (taxable supplies divided by total supplies) and run an annual wash-up at year end.
What if I forgot to claim input VAT in the right period?
Input VAT belongs to the period it was incurred, or the immediately following period. If you missed a recoverable claim on a filed return, correct it with a voluntary disclosure to the FTA rather than adding old input VAT to a later return.
What documents does the FTA want to see for input VAT recovery?
Valid tax invoices showing the supplier's TRN, proof of payment, and customs import declarations for import VAT. Keep everything for five years after the end of the relevant tax period. Without the documents, the claim fails, no matter how genuine the expense.
Keep going
Related VAT guides
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