This Public Clarification (VATP005) explains the application of Article 53 of the VAT Executive Regulations concerning non-recoverable input tax on entertainment services. It defines 'entertainment' and differentiates it from incidental business expenses for both employees and non-employees. The Federal Tax Authority (FTA) clarifies that VAT on costs for a genuine business purpose, such as refreshments during a meeting, is recoverable. However, if hospitality becomes an end in itself, like a gala dinner, the input tax is blocked. The clarification provides criteria for recoverability and addresses specific scenarios like staff parties and sundry office expenses.