Input tax: what it means in UAE tax.

What input tax means

Also called: Input VAT.

Input tax is the VAT charged to a business when it buys goods or services, or when it imports them. The VAT law defines it as tax paid by a person, or due from them, on supplies made to them or on an import. For most purchases in the UAE that means 5% of the price.

A VAT registered business can deduct input tax from its output tax, but only where the purchase is used, or intended to be used, to make taxable supplies (including zero-rated ones) or certain supplies made outside the UAE. Input tax on costs that relate to exempt supplies, or that the Executive Regulation blocks, stays as a cost.

For an SME this is where cash is won or lost. A missing tax invoice, an unpaid supplier bill or a supplier that fails basic checks can all delay or remove the right to deduct.

How it works

• The deduction is claimed in the VAT return for the first tax period in which you hold a valid tax invoice (or import documents) and have paid, or intend to pay, the supplier.
• The Executive Regulation treats you as having paid if you intend to pay within six months of the agreed payment date; if that does not happen, the claim must be reversed.
• Input tax is recoverable only to the extent the purchase is used for taxable supplies. Mixed use costs are apportioned between taxable and exempt activity.
• Some input tax is blocked outright, for example entertainment of people who are not employees and motor vehicles available for personal use.
• Since 1 January 2026 the law lets the Federal Tax Authority deny input tax linked to tax evasion. FTA Decision No. 13 of 2026 sets the supplier checks expected from 1 October 2026.

Worked example

A Dubai office supplies trading company records its purchases for one quarter. Most costs relate to its taxable sales, but it also hosted a dinner for customers.

Stock and overheads before VAT	AED 190,000
Input tax at 5% on stock and overheads	AED 9,500
Customer dinner before VAT	AED 10,000
Input tax at 5% on customer dinner (blocked)	AED 500
Total input tax charged	AED 10,000
Input tax the company can deduct	AED 9,500

Only input tax linked to taxable business use can be deducted; entertaining customers is a blocked cost.

Common mistakes

• Claiming input tax from a supplier invoice that is not a valid tax invoice, or from a proforma or quotation.
• Forgetting to reverse a claim when a supplier bill is still unpaid six months after its due date.
• Claiming VAT on costs that relate to exempt income, such as residential rent, without apportioning.

The law

• Federal Decree-Law No. 8 of 2017 on Value Added Tax, Article 1 (definition of Input Tax)
• Federal Decree-Law No. 8 of 2017 on Value Added Tax, Articles 54 and 55
• Cabinet Decision No. 52 of 2017 (Executive Regulation of the VAT law), Articles 53, 54 and 55, as amended to Cabinet Decision No. 149 of 2026
• Federal Tax Authority Decision No. 13 of 2026 on verification of supplies before deduction of input tax (applying Article 54 (bis) of the VAT law)

Frequently asked questions

Can I claim input tax from before I registered for VAT?

In some cases, yes. The VAT law has a separate rule for input tax paid before registration, with conditions on goods still held and services received. Check the conditions before including it in your first return.

What if I forgot to claim input tax in the right quarter?

The law allows recoverable input tax that was not claimed in the first eligible period to be included in the return for a later tax period. Keep the tax invoice and payment evidence on file.

Related terms

Output tax · Tax invoice · Reverse charge mechanism · Exempt supply · Taxable supply. See every term in the UAE tax glossary.

For the full picture, read our guide: UAE VAT Refunds for Businesses: When You Are Owed Tax and How to Claim It.

Need help with VAT returns? See our VAT returns service.