FTA VAT Public Clarification on Mobile Phones, Airtime, and Data Packages.

The Federal Tax Authority in the UAE published a VAT Public Clarification on Mobile Phones, Airtime, and Data Packages Made Available to Employees for Business Use.

Issue

This manual aims to provide VAT payers with: Many businesses enter into agreements with telecommunication service providers to make mobile phones (“Phones”), airtime (“Airtime”) (i.e. call minutes) and data packages (“Packages”), available to their employees to perform their roles outside office hours or at locations away from the office.

Due to COVID-19, there has been an increase in work-from-home arrangements, resulting in some instances where employers pay for Phones, Airtime, and Packages’ expenses to allow employees to perform their roles remotely.

Due to the potential private use of Phones, Airtime, and Packages, there has been uncertainty as to whether a business is entitled to recover the related input tax and, if so, what the requirements are to be entitled to input tax recovery.

This Public Clarification provides guidance on the application of the VAT legislation in respect of the recovery of input tax incurred on Phones, Airtime, and Packages acquired for business use.

Summary In instances where an employer acquires Phones, Airtime, and Packages for use by its employees solely for business purposes and has a strict policy in place to restrict the use of such Phones, Airtime, and Packages to business purposes, the right to use the Phones, Airtime, and Packages would not constitute a personal benefit for the employee, provided the value of the Airtime and Packages was determined based on actual historical business usage. Note that backdated policies shall not be accepted.

The guide can be downloaded from here:

VATP028 - Input Tax Recovery - Mobile Phones Airtime and Data - 29 11 2021- Tecklenborgh -

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