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UAE VAT Fundamentals/Module 4: Input Tax Recovery
7 min

Blocked Input Tax — Entertainment, Cars, and Personal Use

Categories of input tax that cannot be recovered regardless of business activity.

Blocked Input Tax

Certain categories of input tax are blocked — they cannot be recovered regardless of whether the business makes taxable supplies.

1. Entertainment and Amusement

VAT on entertainment for staff or customers cannot be recovered. This includes:

  • Staff parties and team-building events
  • Cinema tickets and amusement park admissions
  • Entertainment at corporate events

Exception: Food and beverages provided to staff at the workplace are NOT blocked.

2. Cars and Motor Vehicles

VAT on purchase, rental, or lease of cars is blocked, unless the car is used exclusively for business purposes:

  • Taxis and ride-hailing vehicles
  • Driving school vehicles
  • Rental fleet vehicles
  • Delivery vehicles (not designed for passenger transport)

VAT on fuel and maintenance for blocked cars is also not recoverable.

3. Personal Use

VAT on purchases used by the business owner or employees for personal (non-business) purposes is blocked. This includes personal items purchased through the business.

4. Supplies for Exempt Activities

Input tax on purchases that relate to making exempt supplies (e.g., maintenance of a rented residential building) is not recoverable.

5. Non-Recoverable Import VAT

Import VAT on goods for personal use or for exempt activities is not recoverable.

Practical UAE example

**Dubai Marketing Agency**: An agency spends AED 10,000 on a staff party at an amusement park (AED 500 VAT) and AED 30,000 on office computers (AED 1,500 VAT). The AED 500 VAT on the staff party is blocked — not recoverable. The AED 1,500 VAT on computers is fully recoverable as they are for business use.

Key takeaways

  • Entertainment and amusement for staff/customers is blocked.
  • Cars for non-business use are blocked (taxis, delivery vehicles excepted).
  • Personal-use purchases are blocked.
  • Input tax on exempt activities is not recoverable.

Authoritative sources

Federal Decree-Law No. 8 of 2017 on Value Added Tax

United Arab Emirates — Federal Tax Authority · The VAT Law — Articles 1 to 82 (as amended by Federal Decree-Law No. 18 of 2022)

Effective: 1 Jan 2018Verified: 5 Oct 2026View source

Cabinet Decision No. 52 of 2017 on the Executive Regulations of the Federal Decree-Law No. 8 of 2017 on VAT

United Arab Emirates — Cabinet / Federal Tax Authority · Executive Regulations (as amended by Cabinet Decisions No. 46/2020, 24/2021, 88/2021, 99/2022, 100/2024, and 100/2025)

Effective: 1 Jan 2018Verified: 5 Oct 2026View source

FTA — VAT Guides, References & Public Clarifications

UAE Federal Tax Authority · Taxable person guides, tax invoice guides, input tax guides, designated zones, real estate

Effective: 1 Jan 2018Verified: 5 Oct 2026View source
Knowledge check

1. VAT paid on which of the following is blocked from recovery?

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This lesson is general educational content, not individualized tax or legal advice. Always consult a qualified professional for your specific situation.