UAE Tax VAT Input tax recovery: practice questions with answers

Question 1

Anbar Exhibitions LLC, a Dubai registrant making only standard-rated supplies in the UAE, organises a trade conference held entirely in Nairobi, Kenya. The conference fees it charges are outside the scope of UAE VAT because the services are performed in Kenya. In preparing the event it incurs UAE VAT on design work and printed materials bought from Dubai suppliers. Can Anbar recover that input tax?

1. A No, because the input tax relates to supplies that are outside the scope of UAE VAT
2. B Yes, because the conference services would be taxable supplies if they were made in the UAE
3. C Only if Anbar registers for VAT in Kenya and charges Kenyan VAT on the conference fees
4. D Only half of it, because the costs are shared between the UAE business and the foreign event

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Answer: B. Article 54(1) of the VAT Decree-Law allows recovery of input tax incurred for making taxable supplies and for supplies made outside the State that would have been taxable if made in the State. Event services are taxed where performed, so Anbar's Nairobi conference is outside the scope of UAE VAT, but the same services in Dubai would be standard-rated. The design and printing VAT is therefore recoverable, subject to the usual conditions (tax invoice, payment within six months under Article 55).

Question 2

Ruba Landscaping LLC has calendar-quarter tax periods. A registered supplier issued a tax invoice dated 28 September 2026 for tools supplied that day; Ruba received the invoice on 6 October 2026 and intends to pay within the agreed 30-day terms. Under Article 55 of the VAT Decree-Law, in which return or returns may Ruba recover the input tax without having to correct an earlier return?

1. A Only the return for the quarter to 30 September 2026, because the invoice is dated in that quarter
2. B The return for the quarter to 31 December 2026 or, if not claimed there, the one for the quarter to 31 March 2027
3. C Only the return for the quarter to 31 December 2026; if it misses that return, the input tax is lost
4. D Any return filed within five years of 28 September 2026, as for excess recoverable tax

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Answer: B. Under Article 55 of the VAT Decree-Law (with Article 54(2) of the Executive Regulation on the six-month payment intention), input tax is recovered in the tax period in which the registrant has received the tax invoice and has paid, or intends to pay, the consideration. Ruba received the invoice on 6 October 2026, so the conditions are first met in the quarter to 31 December 2026. If it does not claim then, Article 55 lets it include the input tax in the return for the immediately following tax period (quarter to 31 March 2027). A claim after that would be a correction of an earlier return under the Tax Procedures Law (Article 10(5): voluntary disclosure where the FTA specifies, otherwise a later return).

Question 3

Narjis Hospitality LLC (fully taxable) incurred VAT in December 2026 on: (1) annual gym memberships offered to all staff as a perk, not required by any law and not within any case in FTA Decision No. 17 of 2026; and (2) a dinner it hosted for its shareholders after the annual general meeting. Which statement is correct?

1. A Neither is recoverable: one is a staff personal benefit, the other entertainment for non-employees
2. B Both are recoverable, because both relate to people connected with the business
3. C Only the gym memberships are recoverable, because they support staff wellbeing at work
4. D Only the shareholders' dinner is recoverable, because the AGM is a business event

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Answer: A. Article 53 of the VAT Executive Regulation (as amended from 1 October 2026) blocks input tax on:

- goods and services provided to employees for personal use unless legally required or within FTA Decision No. 17 of 2026: the gym memberships are a perk with no such basis, so blocked;
- entertainment for persons other than employees, including shareholders: the AGM dinner is blocked.

Neither amount can be recovered.

Question 4

Najd Pharma Distribution LLC bought an automated picking system (not a building) for AED 8,000,000 plus VAT of AED 400,000, expected to last 9 years. In the year of purchase its recovery percentage was 70%, so it recovered AED 280,000. In the second year of the adjustment period its recovery percentage is 90%. What Capital Assets Scheme adjustment arises for the second year?

1. A Repayment of AED 16,000 by Najd to the FTA
2. B Additional input tax of AED 8,000 recoverable by Najd
3. C Additional input tax of AED 80,000 recoverable by Najd
4. D Additional input tax of AED 16,000 recoverable by Najd

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Answer: D. Articles 57 and 58 of the VAT Executive Regulation: non-building capital assets have a 5-year adjustment period (the 9-year life does not change this).

Adjustment = (400,000 / 5) x (90% - 70%) = 80,000 x 20% = AED 16,000.

Because the recovery percentage has risen, Najd recovers this as additional input tax for that year.

Question 5

Mirfa Print House LLC issued a tax invoice for AED 63,000 including VAT at 5% and accounted for the output tax. The customer paid AED 21,000 and then stopped trading. All the conditions for bad debt relief are now met for the unpaid balance. By how much can Mirfa reduce its output tax?

1. A AED 1,000
2. B AED 2,000
3. C AED 2,100
4. D AED 3,000

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Answer: B. Article 64 of the VAT Decree-Law limits bad debt relief to the tax in the unpaid consideration.

Unpaid balance = 63,000 - 21,000 = AED 42,000 (VAT-inclusive)

Relief = 42,000 x 5/105 = AED 2,000.

Question 6

Hamdan Auto Parts LLC accounted for output tax on all the supplies below and nothing has been received from any of the customers. Which debt qualifies for bad debt relief in November 2026?

1. A Supplied in January 2026; written off in the accounts in October 2026; customer not told of the write-off
2. B Supplied in July 2026; written off in the accounts in October 2026; customer notified in writing
3. C Supplied in February 2026; still shown as a receivable with a doubtful-debt note; customer notified in writing
4. D Supplied in March 2026; written off in the accounts in October 2026; customer notified in writing

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Answer: D. Article 64 of the VAT Decree-Law requires all of: (1) the supply was made and output tax accounted for; (2) the consideration (or part) has been written off as uncollectable in the accounts; (3) more than six months have passed from the date of supply; and (4) the customer has been notified of the amount written off. Only the March 2026 debt meets every condition.