VAT on capital asset paid will be recovered over a period of 10 consecutive years or part thereof for building or 5 consecutive years or part thereof for other capital assets. The period for recovering VAT paid will commence on the day on which the owner first uses the capital asset for the purpose of business.
Assets which qualify as the capital asset:
- Any asset amounting to AED 5,000,000 or more excluding tax, on which tax is payable
- The asset is acquired for the purpose of business, which has estimated useful life of more than:
- 10 years in case of a building or part thereof
- 5 years for all capital assets other than a building or part thereof
Will stage payments made for asset qualify as a capital asset?
Where expenditure is consisting of smaller sums but collectively amounts to AED 5,000,000 or more will qualify as single expenditure if:
- Staged payments are made for the purchase of the building
- For the construction of a building
- Relation to an extension, refurbishment, renewal, fitting out, or other work undertaken to a building
- For the purchase, construction, assembly or installation of any goods or immovable property where components are supplied separately for assembly
|Capital asset||Value||Useful Life||Input VAT Recovery|
|Building||5,000,000 or more||10 years||Over a period of 10 years|
|Other capital assets||5,000,000 or more||5 years||Over a period of 5 years|
|Building||Less than 5,000,000||10 years||Will be recovered in the tax period in which asset is purchased|
|Other capital assets||Less than 5,000,000||5 years||Will be recovered in the tax period in which asset is purchased|
|Building||5,000,000 or more||Less than 10 years||Will be recovered in the tax period in which asset is purchased|
|Other capital assets||5,000,000 or more||Less than 5 years||Will be recovered in the tax period in which asset is purchased|
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