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Can you claim VAT on business gifts and flowersin the UAE?

Last reviewed

Can you recover the VAT?
Depends
VAT charged
5%
Corporate tax
Depends

Usually recoverable for client gifts under AED 500 per person a year. Blocked for gifts to staff.

For the wider rules, see Jewellery.

Still being confirmed. The FTA hasn't published detailed guidance on how the AED 2,000 relief works in practice. Check with your tax advisor before relying on it for a large gifting program.

When you can claim the VATand when it's blocked

You can claim

  • VAT on business gifts and samples for clients can be recovered, but gifts above AED 500 per recipient in a 12-month period become a deemed supply, so you account for output VAT on them.
  • Total output VAT on deemed supplies in a 12-month period is reduced by AED 2,000.
  • If you don't recover the input VAT, no deemed supply arises.

You can't claim

  • Gifts to employees for their personal benefit (birthdays, employee of the month, retirement) are blocked.

Worked examplesand why they land that way

  1. Recoverable

    Branded diaries worth AED 150 each to 200 clients

    Recoverable, under threshold.

    Each client gets less than AED 500 in a 12-month period, so no deemed supply arises. You recover the 5% on the diaries and there's nothing further to account for.

  2. Depends

    AED 2,500 watch for a key client

    Deemed supply on the excess.

    You can recover the VAT on the watch, but a gift over AED 500 to one person in 12 months is a deemed supply, so you also account for output VAT on it. The AED 2,000 annual relief reduces the total output VAT on deemed supplies.

  3. Blocked

    Flowers for an employee's wedding

    Gifts to staff for personal occasions are a free personal benefit, so the VAT is blocked.

What to keepand what to watch

Documents you need

Tax invoice; gift register by recipient and value.

Corporate tax

Depends. Generally deductible when for a business purpose. Hospitality-type gifts may fall under the 50% entertainment rule.

GL account: Gifts and samples / Staff welfare

Common mistakes

No recipient register, so the AED 500 threshold can't be shown. Claiming VAT on staff gifts.

What changed recently

Nov 2024 amendments changed the gift and sample exception and added the AED 2,000 relief.

Questions peopleask about this

What's the AED 500 rule?

Gifts and samples worth more than AED 500 to one person in a 12-month period are deemed supplies, so you account for output VAT on them.

What's the AED 2,000 relief?

Since the November 2024 amendments, total output VAT on deemed supplies in a 12-month period is reduced by AED 2,000.

What if I don't recover the input VAT?

Then no deemed supply arises on the gift.

Can I claim VAT on gifts for staff?

Not for personal occasions like birthdays, employee of the month, or retirement. Those are a personal benefit, so the VAT is blocked.

Relatedexpenses

Rules thisanswer relies on

Legal basis: VAT Law Art. 11; Exec. Reg. (deemed supply exceptions, amended Nov 2024); Exec. Reg. Art. 53(1)(c)

Sources

General treatment for VAT-registered UAE mainland businesses making fully taxable supplies. Free zones, partial exemption, government entities, and the facts of a specific purchase can change the answer. This guide isn't tax advice.