Meaning:
VAT works on two sides:
Output VAT: what you charge customers.
Input VAT: what you recover on eligible expenses.
Mistakes happen when:
You claim VAT you shouldn’t,
Fail to claim VAT you should,
or Misreport transactions.
Golden rule
Recover input VAT only when it relates to taxable business activity and is supported by a valid tax invoice.
The 10 mistakes UAE businesses make most
Claiming VAT on exempt supplies:
If your output is exempt (e.g., residential rent, certain financial services), you cannot recover input VAT.Incorrect reverse charge on imports:
Imported services and some goods require self-accounting for VAT. Many don’t do it.Wrong place-of-supply for services:
Cross-border sales often get misclassified → wrong VAT treatment.Missing import VAT documentation:
Without customs import docs, your VAT recovery can be denied.Employee reimbursements:
Business-related = recoverable. Personal = not recoverable.Invalid or incomplete tax invoices:
Incorrect fields = input VAT denied.Wrong treatment of discounts, credit notes, and bonuses:
Must adjust output VAT correctly.VAT on mixed-use expenses:
You must split business vs personal use (e.g., fuel, phones).Excessive reliance on bookkeeping systems:
ERP errors flow into VAT returns unchecked.Late voluntary disclosures:
This creates penalties and interest.
What to actually do
Reconcile VAT every quarter, not just when filing.
Match VAT ledger vs tax invoices.
Check all import/export records.
Validate invoices: supplier TRN, VAT amount, date, description, etc.
Review top suppliers monthly for input VAT accuracy.
Red flags that invite questions
VAT return doesn’t match accounting records
Large input VAT claims with no documents
Recurring errors, repeated disclosures
Reverse charge missing or wrongly applied
Bottom line: VAT mistakes are predictable and preventable. A 10-minute monthly check saves months of pain later.