What is input tax and output tax?

Article 53 - Calculation of Payable Tax The Payable Tax for any Tax Period shall be calculated as being equal to the total Federal Decree-Law No. 8 of 2017 and its amendments – As published by the Ministry of Finance 25 Output Tax payable pursuant to the provisions of this Decree-Law and which has been done in the Tax Period less the total Recoverable Tax by said Taxable Person over the same Tax Period.

 the amount of VAT has been paid, or is intended to be paid, in whole or in part (in which case the amount of input tax recoverable shall be limited to the equivalent amount). Once the ability to recover input tax has been confirmed, the person is able to include the amount in the relevant tax return as an input tax deduction. 11.2.3. Calculating tax liability A registered person’s tax liability is simply the difference between the output tax payable for a given tax period and the input tax which is recoverable for the same tax period. Where the output tax exceeds the input tax amount, a payment of the difference must be made to the FTA. Where the amount of input tax exceeds the amount of output tax, a taxable person is entitled to a refund of VAT from the FTA. 11.3. Filing tax returns For each tax period, a taxable person will be required to submit a tax return which contains details regarding the supplies made or received by the taxable person. With respect to sales and other outputs, the taxable person will need to report: 1. supplies of goods and services made which are subject to the standard rate of VAT; 2. supplies of goods and services made which are subject to the zero rate of VAT; 3. supplies of goods and services made to the taxable person which are subject to the reverse charge provisions. 4. tax refunds provided to tourists under the Tax Refunds for Tourists Scheme, in case the taxable person is a retailer and provides tax refunds to tourists in the UAE under the official tourists refund scheme; 5. supplies made which are exempt from VAT; and 6. where applicable, amendments or corrections required from previous periods to output VAT amounts. With respect to purchases and other inputs, the taxable person should report: 1. purchases and expenses for which the taxable person would like to recover VAT; and 2. where applicable, amendments or corrections required from previous periods to input VAT amounts. 43 VAT Guide | Taxable Person | VATG001

Article 53 – Non-recoverable Input Tax 33 1. Input Tax shall be non-recoverable if it is incurred by a Person in the following cases: a. Where the Person is not a Government Entity as specified in a Cabinet Decision in accordance with Article 10 and 57 of the Decree-Law, and there is provision of entertainment services to anyone not employed by the Person, including customers, potential customers, officials, or shareholder or other owners or investors. b. Where motor vehicles were purchased, rented or leased for use in the Business and are available for personal use by any Person. c. Where Goods or Services were purchased to be used by employees for no charge to them and for their personal benefit including the provision of entertainment services, except in the following cases: 1) Where the provision of those Goods or Services to the employees is mandatory under the applicable labour legislation in the State or any free zone, including financial and non-financial free zones, provided that this does not include the accommodation provided by the employer to its employees, unless the provision of such accommodation is mandatory pursuant to the decisions or directives issued by the Ministry of Human Resources and Emiratisation.34 2) Where it is a contractual obligation or documented policy to provide those Goods or Services to the employees, in accordance with the cases and 33 Article amended as per Cabinet Decision No. 100 of 2024. 34 Sub-clause amended as per Cabinet Decision No. 149 of 2026. Cabinet Decision No. 52 of 2017 and its amendments – As published by the Ministry of Finance 42 conditions specified by the Authority.35 3) Without prejudice to Clause 1 of this paragraph, where the Taxable Person provides health insurance, including enhanced health insurance, to its employees and their family members (as applicable) up to a husband or one wife, and three children younger than eighteen years. 4) Where the provision of goods or services is a deemed supply under the provisions of the Decree-Law. 2. For the purposes of this Article: a. The phrase “entertainment services” shall mean hospitality of any kind, including the provision of accommodation, food and drinks which are not provided in a normal course of a meeting, access to shows or events, or trips provided for the purposes of pleasure or entertainment. b. The phrase “motor vehicle” shall mean a road vehicle which is designed or adapted for the conveyance of no more than 10 (ten) people including the driver. A motor vehicle shall exclude a truck, forklift, hoist or other similar vehicle. 3. Provision of catering and accommodation services shall not be treated as entertainment services where it is provided by a transportation service operator, such as an airline, to passengers who have been delayed. 4. A motor vehicle shall not be treated as being available for private use if it is within any of the following categories: a. a taxi licensed by the competent authority within the State; b. a motor vehicle registered as, and used for purposes of an emergency vehicle, including by police, fire, ambulance, or similar emergency service; c. a vehicle which is used in a vehicle rental business where it is rented to a customer.