Input VAT recovery is one of the most valuable mechanisms in the UAE VAT system. If you purchase AED 100,000 of goods from a VAT-registered supplier, you pay AED 5,000 in VAT. If you have collected AED 12,000 in output VAT from your own customers in the same period, you remit only AED 7,000 to the FTA (AED 12,000 minus AED 5,000). If input VAT exceeds output VAT, you can apply for a VAT refund. Input VAT cannot be reclaimed on personal expenses, entertainment costs above a threshold, or purchases that relate to exempt supplies.
Watch out: Input VAT cannot be reclaimed without a valid UAE tax invoice — one that includes the supplier's TRN, the VAT amount separately stated, and the buyer's details. A receipt or pro forma is not sufficient.
See also: Output VAT, VAT Return, Tax Invoice
