Can I claim VAT on a company car in the UAE? Purchase, lease and running costs

The VAT Executive Regulation blocks input tax on motor vehicles purchased, leased or rented that are available for personal use by anyone. A motor vehicle here means a road vehicle designed or adapted to carry no more than ten people including the driver. Trucks, forklifts and similar equipment are outside that definition, and vehicles used as licensed taxis, registered emergency vehicles and vehicles rented to customers in a rental business are not treated as available for personal use.

The test is availability, not actual use. A sedan that the sales manager takes home every evening is available for personal use even if she only drives to clients.

Here is how four common vehicles in a Dubai contracting company are treated.

• SUV for the managing director, bought for AED 240,000 plus AED 12,000 VAT, kept at home: AED 12,000 blocked.
• Two-seater pick-up used to carry tools between sites, parked at the yard overnight with a logbook: AED 4,500 VAT on purchase can be recoverable.
• Eight-seater crew bus taking workers from accommodation to site under a transport policy: often recoverable if not available for private use, and work-related transport is one of the cases in FTA Decision No. 17 of 2026.
• Leased saloon in a pool used by sales staff, but taken home at weekends: lease VAT blocked.

If the vehicle is available for personal use, VAT on related running costs such as fuel, servicing and insurance is generally treated the same way. A business-only pick-up with recoverable purchase VAT normally has recoverable running costs too. Keep the fuel card statements tagged by vehicle so this split is possible.

Parking is worth separating. Business-related parking fees are one of the cases listed in FTA Decision No. 17 of 2026 for employee expenses, subject to its conditions. Salik tolls and government fees are separate matters again; check whether VAT is charged at all before thinking about recovery.

The FTA will want evidence that a vehicle genuinely was not available for personal use. Typical evidence includes a written vehicle policy, overnight parking at the business premises, a key log, signage or livery on commercial vehicles, insurance restricted to business use and vehicle logbooks. A pick-up with the company name painted on the doors and parked at a fenced yard tells a clearer story than an unmarked SUV.

Attach the policy and the logbook summary to the vehicle purchase or lease bill in your books. In HelloBooks, each vehicle can be a class or project so purchase, lease, fuel and servicing costs stay grouped and the VAT treatment follows the vehicle.

When a dealer invoice, lease bill or fuel statement arrives, the AI reads the plate number or vehicle description where shown, matches it to the vehicle record and applies the treatment you set: blocked for the MD's SUV, recoverable for the yard pick-ups. A new vehicle with no record triggers a question rather than a guess. The VAT 201 draft then includes only the recoverable vehicle VAT in Box 9.

Fleet-heavy businesses such as logistics or facilities companies often want vehicle-level reports or custom coding rules; the HelloBooks team can configure those after a short call at /book-a-demo.