FTA recently Issued VAT Public Clarification on Mobile Phones, Airtime, and Data Packages Made Available to Employees for Business Use:
A business is entitled to recover input tax in respect of Phones, Airtime, and Packages acquired if these costs are incurred to make taxable supplies and the following requirements are met:
- The business is registered for VAT Public and acquired Phones, Airtime, and Packages in its own name, e.g., the business’ details are reflected on the tax invoices and contract with the service provider;
- The business has a documented policy in place which clearly states that the Phones, Airtime, and Packages may only be used for business purposes, and the consequences of any personal use;
- The business regularly monitors the use of Airtime and Packages and retains justification for the variances;
- The business takes action against employees using Phones, Airtime, and Packages for personal use in accordance with the documented policy; and
- The business retains valid tax invoices in respect of the Phones, Airtime, and Packages acquired.
Important Note:
Note that only documented policies which were already in place at the time the Phones, Airtime, and Packages were made available to the employee will be considered. If all of the above requirements are not met, the recovery of input tax incurred in respect of Phones, Airtime, and Packages will be blocked in accordance with Article 53(1)(c) of the Executive Regulation.
