Can I recover VAT on costs incurred before VAT registration?

Article 56 - Input Tax Paid before Tax Registration 1. A Registrant may recover recoverable Input Tax incurred before Tax Registration on the Tax Return submitted for the first Tax Period following Tax Registration, which has been paid for any of the following: a. Supply of Goods and Services made to him prior to the date of Tax Registration. b. Import of Goods by him prior to the date of Tax Registration. Provided that these Goods and Services were used to make supplies that give the right to Input Tax recovery after Tax Registration. 2. As an exception to the provisions of Clause 1 of this Article, Input Tax may not be recovered in any of the following instances: a. The receipt of Goods and Services for purposes other than making Taxable Supplies. b. Input Tax related to the part of the Capital Assets that depreciated before the date of Tax Registration. c. If the Services were received more than 5 years prior to the date of Tax Registration. d. Where a Person has moved the Goods to another Implementing State prior to the Tax Registration in the State.

Article 54 - Recoverable Input Tax 1. The Input Tax that is recoverable by a Taxable Person for any Tax Period is the total of Input Tax paid for Goods and Services which are used or intended to be used for making any of the following: a. Taxable Supplies. b. Supplies that are made outside the State which would have been Taxable Supplies had they been made in the State. c. Supplies specified in the Executive Regulation of this Decree-Law that are made outside the State, which would have been treated as exempt had they been made inside the State. 2. Where Goods are imported by a Taxable Person through another Implementing State and the intended final destination of those Goods was the State at the time of Import, then the Taxable Person shall be entitled to treat the Tax paid in respect of Import of Goods into the Implementing State as Recoverable Tax subject to the conditions specified the Executive Regulation of this Decree-Law. 3. Where Goods were acquired by a Taxable Person in another Implementing State and then moved into the State, the Taxable Person shall be entitled to treat the Tax paid in respect of the Goods in the Implementing State as Recoverable Tax subject to the conditions specified in the Executive Regulation of this Decree-Law. 4. A Taxable Person shall not be entitled to recover any Input Tax in respect of Tax paid in accordance with Clause 2 of Article 48 of this Decree-Law. 5. The Executive Regulation of this Decree-Law shall specify the instances where Input Tax is excepted from being recovered. Article 54 (bis)22 1. The Authority shall reject the deduction of the Recoverable Input Tax if it is established to the Authority that the supply subject to the deduction was part of a supply or a chain of supplies related to Tax Evasion, and the Taxable Person was aware of this relation upon deducting the Recoverable Input Tax. 2. The Authority may reject the deduction of the Recoverable Input Tax if it is 22 Article added as per Federal Decree-Law No. 16 of 2025. Federal Decree-Law No. 8 of 2017 and its amendments – As published by the Ministry of Finance 26 established to the Authority that the supply subject to the deduction was part of a supply or a chain of supplies related to Tax Evasion, and the Taxable Person should, based on circumstances of the supply, have been aware of this relation. 3. For the purposes of applying the provisions of Clause 2 of this Article, the Taxable Person shall be considered to have been required to be aware that the supply was part of a supply or a chain of supplies related to Tax Evasion, if he did not verify the validity and integrity of the supplies he receives before deduction of Input Tax, in accordance with the measures, procedures and conditions determined by the Authority in this regard.

Your Entitlement to recover input tax A registrant may recover the input tax incurred on the purchase of goods and services in the course of business subject to keeping records andtax invoices that determine the value of VAT charged by suppliers, and which proves that VAT was paid on such goods or services. The total tax incurred during any tax period should be disclosed in the tax return for that tax period. Blocked input tax Input tax incurred by a registrant may be blocked from recovery. Such expenses are: - Entertainment costs; - Motor vehicles used for personal purposes; and - Employee-related expenses.