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May 15, 2026

This Public Clarification addresses the conditions for recovering input VAT on mobile phones, airtime, and data packages provided to employees. It clarifies the application of Article 53(1)(c) of the Executive Regulation, which prohibits recovery for services used for an employee's personal benefit. The FTA confirms that input tax is recoverable if the employer can demonstrate that these services are used solely for business. To meet this requirement, a business must have a strict, pre-existing documented policy restricting personal use, actively monitor employee usage, and take action against non-compliance. Without meeting all conditions, input tax recovery remains blocked.

VATP028

VAT Public Clarification

Mobile Phones, Airtime, and Data Packages Made Available to Employees for Business Use

Issue

Many businesses enter into agreements with telecommunication service providers to make mobile phones (“Phones”), airtime (“Airtime”) (i.e. call minutes) and data packages (“Packages”), available to their employees to perform their roles outside office hours or at locations away from the office. Due to COVID-19, there has been an increase in work-from-home arrangements, resulting in some instances where employers pay for Phones, Airtime, and Packages' expenses to allow employees to perform their roles remotely.

Due to the potential private use of Phones, Airtime, and Packages, there has been uncertainty as to whether a business is entitled to recover the related input tax and, if so, what the requirements are to be entitled to input tax recovery.

This Public Clarification provides guidance on the application of the VAT legislation in respect of the recovery of input tax incurred on Phones, Airtime, and Packages acquired for business use.

Summary

In instances where an employer acquires Phones, Airtime, and Packages for use by its employees solely for business purposes and has a strict policy in place to restrict the use of such Phones, Airtime, and Packages to business purposes, the right to use the Phones, Airtime, and Packages would not constitute a personal benefit for the employee, provided the value of the Airtime and Packages was determined based on actual historical business usage. Note that backdated policies shall not be accepted.

Detailed discussion

Input Tax Recovery – General Rule

A taxable person may generally recover input tax paid for goods and services used (or intended to be used) for making taxable supplies.

The right to recover input tax is, however, limited in instances provided for in the Executive Regulation, regardless of whether the cost was incurred to make taxable supplies.

Non-permissible Recovery of Input Tax

Article 53(1)(c) of the Executive Regulation prohibits the recovery of input tax incurred on goods or services purchased to be used by an employee for their personal benefit without any charge to the employee, unless there is a legal or contractual obligation on the employer to provide such service in order for the employee to perform their role, or it is a deemed supply