Input Tax Recovery — Conditions and Eligibility

Input Tax Recovery

Input tax is the VAT a registered business pays on purchases for business use. Recovering it reduces the net VAT payable to the FTA.

Conditions for Recovery

All four conditions must be met:

1. Business use: The goods or services must be used for making taxable supplies.
2. Tax was paid: The input tax must have been actually paid to the supplier.
3. Valid tax invoice held: A proper tax invoice must be in the business's possession.
4. Not blocked: The input tax must not fall in a blocked category (entertainment, cars for non-business use, etc.).

What Can Be Recovered

• VAT on raw materials and inventory
• VAT on office equipment, furniture, and fixtures
• VAT on commercial rent
• VAT on professional services (legal, accounting, consulting)
• VAT on utilities for business use
• VAT on fuel and transport for business
• Import VAT paid at customs

Pre-Registration Input Tax

Newly registered businesses can recover:

• VAT on goods purchased in the previous 5 years (if still held in stock)
• VAT on services received in the previous 6 months

Timing

Input tax is recovered in the VAT return for the tax period when the goods or services were received (or payment was made, whichever is earlier), provided a valid tax invoice exists.