Grant Classification
Outside Scope
No supply in return. Pure subsidy — not linked to specific supply. General operating grants from government. No VAT charged. No impact on input recovery. Example: Tamkeen training subsidies.
Third-Party Consideration
Payment linked to supply. Government pays you to supply services to public. VAT due on grant amount. Grant = consideration for supply. Example: subsidised housing services, public transport.
⚠️ Key Test
Is there a direct link between the grant and a specific supply? If yes = taxable. If the grant is a general subsidy with no obligation to make a specific supply = outside scope. Each grant must be analysed individually based on its terms and conditions.