UAE VAT Apportionment Rules Change for Tax Years After October 1, 2027

• Cabinet Decision No. 149 of 2026 revises UAE VAT input tax apportionment rules in Article 55, effective for the first tax year starting after 1 October 2027.
• Input tax linked to supplies under Article 54(1) or Article 57 remains fully recoverable; blocked input tax under Article 53 or costs not relating to those supplies remains non-recoverable.
• For mixed-use input tax partly linked to Article 54(1) supplies, the recoverable amount is calculated under Clause 7 using a turnover-based ratio: Article 54(1) supplies over total supplies, rounded to the nearest whole number.
• Capital asset disposals and receipts of Concerned Goods/Services under Article 48 are excluded from the turnover calculation, so they do not affect the recovery percentage.
• Taxpayers on partial exemption bases, especially in financial services, insurance, and real estate, should model the new method in 2027 and review any existing FTA-agreed apportionment methods.

Source: mailchi.mp

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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