FTA’s public clarification on Disbursements & Reimbursements VAT P013

This Public Clarification discusses the VAT principles for differentiating between a Disbursement and Reimbursement and their VAT treatments respectively.

Reimbursement Expenses falls within the scope of VAT while the other is out of scope.

The key elements for considering payments as disbursements:

1. The payments should be made as an agent of the principal.

2. The invoice should be in the name of principal.

3. The payment should be separately shown on the invoice

4. There should be authorisation from principal for the payment.

5. There should not be any markup on the transaction.

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Read More : https://www.tax.gov.ae/-/media/Files/FTA/links/Public-Clarification/VATP013—Disbursements-and-Reimbursements.pdf