Definition

The Capital Asset Scheme in UAE VAT is a system that adjusts input VAT recovery on large capital assets over a period of up to 10 years.

Key points

• Applies to assets worth more than AED 5 million.
• Input VAT recovery is spread over 10 years.
• Annual adjustments required if use changes (e.g., taxable vs exempt supplies).
• Ensures fair VAT recovery aligned with business use.

Practical example

A hotel builds a property for AED 50 million plus VAT. Input VAT is recovered through the Capital Asset Scheme over 10 years, adjusted annually.

Why it matters

Prevents overclaiming VAT on high-value assets that may later be used for exempt purposes.