GTL Summary:

Article 45 of the GCC Common VAT Agreement establishes two specific scenarios where Input Tax borne by a Taxable Person cannot be deducted. Firstly, a deduction is prohibited if the tax is incurred for purposes other than Economic Activities, with the precise definition of such activities being determined by each Member State's domestic legislation. Secondly, Input Tax is non-deductible if it has been paid on goods that are prohibited from being traded within a Member State according to its applicable laws. This ensures that VAT recovery is strictly limited to legitimate and lawful business expenditure.