How will VAT recovery for businesses operating in Designated Zones work?
A business located in a Designated Zone will have to adhere to the normal VAT recovery rules as follows:
Businesses that make taxable supplies, or make supplies that would be taxable if they took place in the UAE, can recover the VAT paid on expenses in full.
Businesses that make supplies that do not give the right to VAT recovery will be unable to recover VAT on expenses that can be directly attributed to making the supply.
Businesses need to apportion VAT paid on expenses that are partly recoverable and partly non-recoverable. This is to identify the recoverable part.
Businesses must be registered for VAT with the FTA in order to be able to recover VAT.