Input Tax Apportionment: Special Methods

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

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