The Federal Tax Authority (FTA) has released a VAT Public Clarification “VATP028” on the input VAT recovery of mobile phones, airtime (i.e. call minutes) and data packages available to employees for business use.
On 6 December 2021, the FTA released a Public Clarification that impacts most taxpayers. The FTA takes the position that recovery of input tax on mobile phone expenses is only possible when a strict business use policy is in place and the taxpayer conducts an active enforcement of such policy.
Further, the FTA states that it is not possible to change the policy retrospectively. Therefore, it is likely that the Public Clarification will have an impact on input VAT previously recovered in relation to mobile phone expenses, and any invalid VAT claims would need to be corrected.
Henceforth, taxpayers should evaluate whether a strict policy should be introduced or if the entire amount of input VAT incurred on mobile phones, airtime and data packages available for employees should be borne as a business cost.
Source KPMG
See also
- VAT Public Clarification (P028): Mobile Phones, Airtime, and Data Packages Made Available to Employees for Business Use
- Overview of the 28 VAT Public Clarifications issued by the Federal Tax Authorities
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