VAT on entertainment expenses. What is recoverable?
What are Entertainment expenses
Entertainment is hospitality of any kind including:
Food and drinks
Access to shows or events or trips provided for pleasure or entertainment
Food and drinks “in a normal course of a meeting”
The hospitality is provided at the business venue
The hospitality is provided in a short break during the meeting
Hospitality cost per head does not exceed employee subsistence claim, if there is a policy for that
The hospitality is not accompanied by a motivational speaker, a music band, or any other form of entertainment
The hospitality is not substantial that it would constitute and end in itself, and that would encourage people to attend (where no charge is made of attendees)
Catering for conferences and business event
Where a fee and output VAT is charged, input VAT on catering services is recoverable
Where no fee is charged, input VAT on catering services cannot be recovered
Sundry office expenses
Input VAT on normal incidental office expenses for general use by both employees and visitors are recoverable such as:
Tea & coffee; and dates, chocolates or equivalent snacks available in office or during meetings for general use by employees or non-employees for no charge.
Flowers displayed in office or for decoration during special events
Input VAT is not recoverable for:
Events made specifically for staff entertainment like staff parties unless a charge is made for attendees.
Free goods or services for employees’ rewards and gifts such as:
Long service awards
Eid gifts, or gifts for other festivals or special occasions
Gifts given on the occasion of a wedding or birth of a child
Employee of the month gifts
Dinner to reward service.
Employees expenses & reimbursements
Input VAT is recoverable for employees’ expenses incurred for business purposes such as:
Domestic business trip expenses: accommodation, food and drinks. (provided that it is not related to entertaining a current or potential customer)