Clarification on Designated Zones Guide and VAT Recovery of Entertainment by UAE FTA

The UAE FTA recently published a clarification on the treatment of supplies to, from and within the Designated Zones in the VAT guide on Designated Zones. The guide contains the details of the Free Zone and characteristics that must be present to qualify as a Designated Zone for VAT purposes. The clarification also contains details of businesses operating within and outside the Designated Zones and the implication of VAT on their activities.

Along with the above clarification, a public clarification on VAT recovery rules on business entertainment is also issued. The clarification focuses on Article 53 of the VAT Executive Regulations in relation to VAT that is non-recoverable on entertainment or hospitality of any kind. The clarification also provides insights on the types of supplies that are made by a business to its employees and clients that are blocked from input tax recovery under Article 53 of the UAE VAT Regulations.