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Value-added
tax is one of the most significant taxation systems in the United Arab
Emirates. The plus point of this taxation system is that the payable tax amount
fluctuates with the increase and decrease in product or service value. So, the
business, as well as the common population, do not have to pay a hefty fix
amount in the wake of taxes.
Moreover,
the businesses can also claim VAT repayment according to the decrease in the
value of their respective product or service. This is the point which causes
concerns to the VAT taxpayers, as they feel difficulty in calculating the
amount and following legal procedure. There are some service expenses that are
non-recoverable, which add to their hassle.
This the article aims to shed light on the type of entertainment service non-recoverable
under VAT in the United Arab Emirates.
Top 4 Entertainment Services Non-Recoverable Under VAT in UAE
Among
the non-recoverable services under VAT in the United Arab Emirates,
entertainment services hold the very first position. Although serving lunch and
tea during the business meetings is acknowledged as a recoverable expense, as
it is for the sake of conducting business. Still, there are numerous other entertainment-related
services and activities for which the parties cannot claim repayment.
The
following are some of the most important entertainment services that are
non-recoverable under VAT in the
UAE.
1. Iftar Party
The very first non-recoverable entertainment service under VAT in UAE is the Iftar
party. The value-added tax is implemented to provide ease and benefit to the
businesses in their operations. It can be reclaimed in the scenario directly
related to their business dealing.
However,
Iftar parties are more like a personal affair as they are meant to boost market
relations. Moreover, the businesses can also invite their employees to the
parties that are not linked with business dealing, so it is not recoverable.
Most of the business organizations acquire the services of the best VAT
consultancy in Dubai to avoid any mistake in such propositions.
2. Staff
Birthday Party
Hard-working
employees are the backbone of any successful business organization. It is only
right to make them feel special on the most important day of their life and
acknowledge their service. So, celebrating the birthdays of staff and
conducting parties has become an important part of the corporate culture.
However,
the important thing that you need to know is that such an expense cannot be
recovered under the value-added tax in the United Arab Emirates. The reason is
that it is more of a personal activity than a business-related. Similarly, the
farewell parties for the employees to acknowledge their service to the
organization, fall in the same category.
3.
Motivational
Speech, Music Event & Food
Another
quite common entertainment activity organized by almost every other business in
this modern era includes motivational speeches, music events, and food. Such
services are arranged to give a boost to the spirits of the workforce and
provide them a healthy break form routine work.
So,
these services are also arranged at a personal level and are not directly
linked with business deals. The business owners cannot recover their expense of
such activities through value-added tax in UAE. They have to bear all the
costs. Such activities do give rise to the business activity and are a part of
the process, but not the actual process.
4. Gala Dinner
Gala dinner is an
entertainment activity that could be meant to provide a little break from work
to the employees. It can also be a source of acknowledging the partners,
investors, and sponsors in a personal capacity. Food, drinks, and numerous
other light activities are part of such dinners.
So,
the gala dinner is not a service directly related to some business deals. In
other words, a business can operate well even without conducting gala dinner.
Such an expense is not recoverable under VAT. You can always connect with the
professional from the best VAT consultancy in Dubai to get rid
of all your confusions and manage your expenses properly, so you do not face a
loss later.
Provide entertainment service after knowing about VAT!
Most
of the business, organizations organize the entertainment services and invite their
circle to it, in the wake of boosting their business relations and securing a
little benefit. They think that they are doing this to boost their business so
that they can recover the expenses through VAT.
However,
this is not the case. You need to be vigilant, as well as well-informed about
the type of entertainment service you cannot recover through value-added tax.
It often seems like a complicated matter, but you do not need to lose heart.
Connect with professionals and know all the complicated and concerning points
to maximize your profits.
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