UAE Input VAT Recovery: Rules, Blocked Deductions, and the Specified Recovery Percentage Explained

• The UAE VAT regime allows businesses to recover input VAT on costs linked to taxable supplies, but recovery is subject to strict requirements and documentation.
• Input VAT on exempt supplies or non-business use is not recoverable, and detailed rules are set out in the VAT Executive Regulations.
• Businesses making both taxable and exempt supplies must apportion input VAT, calculating a recovery percentage based on the ratio of taxable to total supplies.
• Residual Input Tax (not directly attributable) is recoverable only in proportion to taxable supplies, with the remainder blocked.
• The UAE FTA introduced the Specified Recovery Percentage (SRP) option to address the administrative burden and disputes caused by frequent recalculations and annual adjustments.

Source: aurifer.tax

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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