Can you claim VAT on government feesin the UAE?
Last reviewed
- Can you recover the VAT?
- Depends
- VAT charged
- None or 5% on service fees
- Corporate tax
- Depends
No VAT on the government fee. Typing center and service fees carry 5% you can claim.
When you can claim the VATand when it's blocked
You can claim
- Fees for sovereign government activities (licenses, permits, court fees, fines) are outside the scope of VAT.
- Service fees added by typing centers or service partners carry 5% and are recoverable with a tax invoice.
- Some government bodies run commercial services that do charge VAT.
You can't claim
- Fines and penalties carry no VAT.
Worked examplesand why they land that way
- No VAT to recover
Trade license renewal
No VAT, deductible.
License fees for sovereign government activities are outside the scope of VAT, so there's nothing to claim. The fee is deductible for corporate tax.
- Recoverable
Typing center fee of AED 70 plus VAT
Unlike the government fee itself, a typing center's service fee is taxable. The VAT is recoverable with the center's tax invoice.
- No VAT to recover
Traffic fine
No VAT, not deductible.
Fines carry no VAT, so there's nothing to recover. They're also not deductible for corporate tax.
What to keepand what to watch
Documents you need
Government receipt; tax invoice from the service center for the service fee.
Corporate tax
Depends. Licenses and permits are deductible. Fines and penalties are not deductible unless they are compensation for breach of contract.
GL account: Licenses and permits / Government fees / Fines (non-deductible)
Common mistakes
Claiming VAT on the government portion. Deducting traffic fines for corporate tax.
Questions peopleask about this
Do government bodies ever charge VAT?
Some government bodies run commercial services that do. Fees for sovereign activities, like licenses, permits, and court fees, are outside the scope of VAT.
Are fines deductible?
No. Fines and penalties carry no VAT and aren't deductible for corporate tax.
What do I need to claim the service fee?
A tax invoice from the typing center or service partner showing its TRN.
Relatedexpenses
- VISA and residency payments Depends
- Professional services Recoverable
- Charity No VAT to recover