No VAT on donations, grants, sponsorships: FTA
The Federal Tax Authority, FTA, has clarified that donations, grants and sponsorships are outside the scope of Value Added Tax, VAT, only when no benefit is received in return.
Any benefit in return for such payments will be subject to VAT, the authority said.
The authority had issued a new clarification on VAT treatment for donations, grants and sponsorships through its “Public Clarifications” service available on the FTA’s official website to familiarise taxpayers with the technicalities and procedures surrounding the tax system.
In a statement issued today, the FTA asserted that the terms “donation”, “sponsorship” and “grant” by themselves will not determine the VAT for such payments, urging businesses to consider all facts and circumstances before arriving at a conclusion.
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