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This Federal Tax Authority guide provides detailed guidance on Value Added Tax (VAT) input tax apportionment for businesses in the UAE making mixed taxable and exempt supplies. It explains the standard input-based method, including calculations for each tax period and mandatory annual adjustments. The guide elaborates on four special apportionment methods—Outputs-based, Transaction Count, Floorspace, and Sectoral—outlining their mechanisms, eligibility criteria for specific industries, and the formal application process. It primarily clarifies the practical implementation of rules under Article 55 of the Executive Regulation and the recovery principles from Article 54 of the Decree-Law.

Input Tax Apportionment Value Added Tax

VATGIT1

June 2023

1. Introduction

1.1. Overview
1. 1.1.1. Short brief
2. 1.1.2. Purpose of this document
3. 1.1.3. Who should read this document?
4. 1.1.4. Legislative references
5. 1.1.5. Status of the Guide

2. Overview of Input Tax Apportionment

2.1. Chapter summary
2.2. Entitlement to recover input tax
2.3. Input tax apportionment per tax period
2.4. Input tax apportionment – Annual adjustments

3. Special Apportionment Methods

3.1. Outputs-based method
1. 3.1.1. How does it work?
2. 3.1.2. Who is the method available to?
3.2. Transaction Count method
1. 3.2.1. How does it work?
2. 3.2.2. Who is this method available to?
3.3. Floorspace method
1. 3.3.1. How does it work?
2. 3.3.2. Who is this method available to?
3.4. Sectoral method
1. 3.4.1. How does it work?
2. 3.4.2. Sector allocation methods
3. 3.4.3. Who is this method available to?

4. Applying for a special input tax apportionment method

4.1. How does it work?
4.2. Who may apply for a special input tax apportionment method?
4.3. Who can submit the application?
4.4. Which special input tax apportionment methods to apply for?

5. Input Tax Apportionment Request Form

5.1. What information will you need when completing the Request Form?
5.2. Submitting the Input Tax Apportionment Request Form
5.3. FTA's decision in respect of the application
5.4. Notifications relating to change in business
5.5. When to re-apply?

6. Updates and Amendments

Appendix 1: Completing the Application Form

Appendix 2: Example on input tax apportionment

Appendix 3: Common Errors

Introduction

Overview

Short brief

VAT is a general consumption tax on the supply of goods and services, that applies to most supplies which take place within the territorial area of the UAE.

Purpose of this document

The purpose of this Guide is to provide guidance on input tax apportionment and the special input tax apportionment methods which may be used by certain types of entities where the standard input tax-based apportionment method does not yield a fair and reasonable result.

The Guide provides:

An overview of the general input tax apportionment rules and the available special methods of input tax apportionment;
An overview of the process to apply for a special method of input tax apportionment; and
The information needed to complete the form to apply for a special apportionment method.
For any additional questions regarding the process to apply for a special input tax apportionment method, please contact info@tax.gov.ae.

Contents

Introduction

Overview

Short brief

Purpose of this document

Who should read this document?