Definition

The De-Minimis Rule in UAE VAT allows businesses making both taxable and exempt supplies to recover input VAT on mixed expenses if exempt supplies remain below a specific threshold.

Key points

• Threshold: exempt supplies < 50% of total supplies and < AED 375,000 per year.
• Businesses can recover all input VAT on shared expenses if rule is met.
• Must recalculate annually and adjust.

Practical example

A business earns AED 2 million taxable revenue and AED 100,000 exempt revenue. Since exempt supplies are under 50% and AED 375,000, full input VAT recovery is allowed.

Why it matters

Provides relief for businesses with small exempt activities while keeping VAT recovery efficient.