Input VAT you cannot recover in the UAE

Not all input VAT comes back

The default is generous: VAT you pay on costs used to make taxable supplies is recoverable. But the Executive Regulations block recovery on specific categories regardless of how business-related the spend feels — and claiming blocked VAT is one of the easiest findings an FTA audit can make, because it sits in plain sight on the return.

The blocked categories

• Entertainment provided to anyone who is not an employee — client dinners, hospitality, events for customers and partners
• Motor vehicles that are available for personal use — the purchase, lease, fuel and maintenance VAT is blocked unless the vehicle qualifies (taxi, driving school, genuine pool car with no personal use)
• Goods or services purchased for employees' personal benefit free of charge, unless there is a legal or contractual obligation to provide them

The grey zones worth respecting

Staff entertainment has narrow allowances (modest hospitality incidental to business meetings is treated differently from a gala dinner), and 'available for personal use' on vehicles is judged on facts, not on what the logbook says. When a cost sits in a grey zone, the defensible position is to hold the claim until the facts are documented — not to claim first and explain later.

How Hysaab applies this

Hysaab classifies input VAT per line as recoverable, blocked or conditional, keeps blocked VAT out of the return automatically, and shows the blocked total on its own report — so the cost is visible, but never claimed.

Keep reading

• Tool: VAT calculator — UAE 5% & KSA 15%
• Guide: Can you recover VAT on staff accommodation in the UAE? The MoHRE test from 1 October 2026
• Guide: VAT on cash payments and petty cash in the UAE: the input tax block from 1 October 2026
• Guide: Invoice without a TRN: can you still claim the VAT?
• Guide: FTA VAT audit: what actually happens, and how to prepare your records