On 31st of December 2019, the FTA has published updated version of the Input Tax Apportionment: Special Methods (VATGIT1).
In a nutshell:
– the FTA requires calculations for a period of 12 months preceding the application (previously the FTA allowed calculations for a period of at least 6 months). The FTA collated common mistakes and published them in the Appendix 3 to the Guide:
– Lack of stamped/signed letter;
– Attribution of expenditure is not clear
– whether considered as related to taxable activities, exempt or to be tagged as residual tax; – incorrect rounding of recovery percentage;
– putting expenditure subject to the RCM in the outputs method calculation.
Couple of reminders:
– input tax blocked as per the legislation (i.e. Article 53 of the CD no. 52 of 2017) is not a part of the standard method calculation;
– communal areas (lobbies, lifts) should be removed from floorspace method calculation;
– input transactions should be excluded (including RCM) if one uses transaction count method;
– methodology of input tax allocation between sectors has to be clear;
– contracted personnel should be included in the headcount method calculation.
And last but not least
– if your calculation does not match with your submitted returns – please provide clarifications.
Source 2020 01 02 UAE Input tax apportionment special methods
