Public Clarification on Input Tax Related to Mobile Phones

The Federal Tax Authority has released a public clarification (VATPO28) explaining its policy on the recovery of input tax relating to the cost of providing mobile phones, and airtime/ data packages to employees.

Input tax on phones and packages acquired for use by employees will be recoverable provided the business has a strict policy in place to restrict the use to solely business purposes.

The clarification explains the conditions that must be met as follows:

• The business must have a documented policy on the restricted use of phones and packages
• The business will be required to demonstrate that it monitors the use of airtime and packages and takes appropriate action against employees who do not follow the documented policy
• employees should be made aware of the repercussions of not abiding by the policy and the taxable person should retain proof of action taken against employees not complying with the documented policy

Source BDO