UAE Guide: Why is Input VAT Non-recoverable on Entertainment Services in Dubai?
Entertainment Services means those expenses which are incurred for activities which are meant to entertain personnel. One of the examples to understand this is free staff parties, food in office, free gifts given away etc. The FTA is of the opinion that the VAT incurred on goods purchased and services incurred, to be used for giving such free services, should be blocked for recovery. Hence, VAT incurred on Entertainment services is a non-recoverable input tax.
The key points of the clarification issued by the FTA in July, 2018 were:
- Entertainment provided to non-employees is not recoverable for general businesses.
- Entertainment provided to employees may be recoverable only where there is a legal or contractual obligation, or it is deemed supplies.
Entertainment service as per Dubai VAT law
- Any entertainment trips.
- Accommodation facility.
- Food and drinks other than given in the normal course.
- Entry to any shows or events.
Scenarios where Input Tax in Dubai, UAE is not recoverable on Entertainment Service
- Customers/Potential Customers
- Owners
- Investors
- Shareholders
- Officials
Scenarios where Input Tax in Dubai, UAE is recoverable on Entertainment service
- If there is a legal obligation as per the Dubai law.
- If it is a contractual obligation.
- In order for employees to perform their role better and is in due course of normal business practice.
For more information on this topic, please visit our Insights Section or Contact Us
For enquiries Phone (UAE): +971 567952590
Related Articles:
1. UAE Guide: What are VAT Groups in Dubai?
2. UAE Guide: How to apply for VAT Registration in Dubai and Abu Dhabi?
3. UAE Guide: How does VAT Regime work in Dubai?
4. UAE Guide: How does VAT Return submission work in Dubai?
5. UAE Guide: Duties and Eligibility for Tax Agent in Dubai
6. UAE Guide: What are Steps to submit VAT return in Dubai?
7. UAE Guide: What is Special VAT Refund in Dubai?
8. UAE Guide: What is Impact of VAT on E-commerce Business in Dubai and Abu Dhabi?
9. UAE Guide: How to Apply for VAT registration Number in Abu Dhabi and Dubai?
10. UAE Guide: How to De-register your Firm under VAT in Dubai and Abu Dhabi?
11. UAE Guide: What is FTA Audit File of VAT in Dubai?
12. UAE Guide: What are the FTA Accredited VAT Accounting Software for Dubai?
13. UAE Guide: What is Exports and Imports under VAT in Dubai?
14. UAE Guide: What is Zero Rated and Exempt Supply Under VAT in Dubai and Abu Dhabi?
15. UAE Guide: How to De-register from VAT in Dubai?
16. UAE Guide: How to Claim Your VAT Refund in Dubai and Abu Dhabi?
17. UAE Guide: What is Cabinet Decision No. 52 of 2019 by FTA for Abu Dhabi and Dubai?
18. UAE Guide: How to Generate Invoices under VAT Law in Abu Dhabi and Dubai?
19. UAE Guide: What is the Provision of VAT refund for Business visitors in Dubai and Abu Dhabi?
20. UAE Guide: What is Impact of VAT on Sale of Business in Dubai?
21. UAE Guide: How to Amend VAT Details in Dubai and Abu Dhabi?
22. UAE Guide: What are VAT Designated Zones in Dubai?
23. UAE Guide: What is VAT on Telecommunication & Electronic Services in Dubai?
24. UAE Guide: What is VAT on Financial Services & Islamic Finance Products in Dubai?
25. UAE Guide: What is VAT on Real Estate Services in Dubai?
26. UAE Guide: What is VAT on Education Services in Dubai?
27. UAE Guide: What is Related Parties under VAT law in Dubai?
28. UAE Guide: What is VAT Profit Margin Scheme in Dubai?
29. UAE Guide: What is VAT Reverse Charge Mechanism in Dubai?
30. UAE Guide: What is VAT Capital Assets Scheme in Dubai?
31. UAE Guide: What is VAT on Healthcare in Dubai?
32. UAE Guide: What is VAT Tax Group in Dubai?