When can businesses in the UAE recover VAT on employees’ mobile phones? The UAE Federal Tax Authority has issued a clarification.
The clarification lays out criteria for claiming VAT on employees’ phones. The employer must:
It also needs to be the case that the actual use of the phones does not constitute a personal benefit to employees. As the guidance points out, UAE rules prohibit the recovery of input tax incurred on goods or services that are provided without charge to the employee “unless there is a legal or contractual obligation on the employer to provide such service in order for the employee to perform their role, or it is a deemed supply.”
That is, simply because a company supplies an employee with goods or services, it does not automatically follow that the provision is a business expense which is subject to VAT reclaim. The items in questions must be provided for business purposes, properly understood, and cannot constitute a personal benefit to the employee.
The Federal Tax Authority adds that the above business-use only provisions need to be actively implemented and monitored. Specifically, the business must regularly monitor data and airtime use and justify apparent divergences from proper use. Moreover, the company must take action against employees that use their business phones for personal use.
From an administrative perspective, the business must be VAT registered and it must acquire the phone, airtime and data packages in its own name. The businesses must also retain all applicable invoices.
The authority adds that these policies must be in place at the time the employee is supplied with their mobile phones. The authority will not accept backdated policies.
Get a smart end-to-end VAT reclaim solution that makes managing invoices, complex regulations and VAT recovery processes simple, efficient and cost-effective. Get in touch with VAT IT for a smart solution that ensures you are always 100% VAT compliant and maximises your company’s reclaim opportunities.
How Digital VAT Processing Improves Reclaim Success Rates...
How Digital VAT Processing Improves Reclaim Success Rates VAT reclaim is often treated as a transactional exercise, submit the claim, wait for the outcome, and respond if queries arise. In reality, reclaim success is shaped much earlier in the process. The way VAT data is captured, validated, processed and stored has a direct impact on approval rates, processing times, and audit exposure. As tax authorities […]
Catering Services & VAT: When Deliveries Are Not...
Catering Services & VAT: When Deliveries Are Not Enough At first glance, it might seem obvious: if a business delivers food, it must be catering. But in VAT terms, it’s not that simple. Across the EU, UK, and beyond, courts and tax authorities have consistently drawn a sharp line between food delivery as a supply […]
Eezi by VAT IT Officially Approved as a...
Eezi by VAT IT Officially Approved as a Plateforme Agréée in France France’s e-invoicing reform is fast approaching, and businesses operating in or trading with France are preparing for one of the most significant tax and reporting shifts in recent years. Today, we’re proud to share an important milestone in that journey. Eezi, VAT IT’s global e-invoicing software, has been definitively registered and approved […]
Can You Recover VAT if Your Supplier’s VAT...
Can You Recover VAT if Your Supplier’s VAT Number is Revoked? A Closer Look at the Latest ECJ Case VAT recovery should be straightforward: if you purchase goods or services for taxable business use, you expect to recover the VAT charged. But what happens when there is a technical issue on the supplier’s side, particularly […]
What Is a CTP? A Complete Guide Certified...
What Is a CTP? A Complete Guide Certified Taxable Person, or CTP, is an EU VAT concept designed to make cross-border trade a little less painful and a lot more predictable. It identifies trusted businesses that meet strict compliance and reliability criteria, allowing them to benefit from simplified VAT treatment when trading within the EU. […]
Reverse Charge for VAT: A Mandatory and Optional...
Reverse Charge for VAT: A Mandatory and Optional Mechanism The VAT reverse charge mechanism shifts the responsibility for reporting VAT from the seller to the buyer. Instead of the supplier charging VAT and remitting it to the tax authority, the buyer declares and pays the VAT on their own VAT return. This avoids forcing foreign […]
