A recharge happens when there are three entities involved. For example, Entity B incurs costs charged by Entity A which are then recharged by Entity B to Entity C. In each of the supplies, the VAT treatment could potentially change, depending on nature of the transaction, relationship between the entities and whether recharge is at cost or with a mark-up. The challenge in determining the VAT liability for recharges are multi-fold.
The full article on " How to make 'Recovery of Cost' under VAT" can be accessed here: https://www.khaleejtimes.com/business/how-to-make-recovery-of-cost-under-vat
Source: Khaleej Times
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