UAE Federal Tax Authority has recently published a very important public clarification on “Time-frame for recovering Input Tax” (VAT Public clarification - VATP017).
Below are the key highlights of the FTA Public Clarification:
Conditions for Input VAT recovery:
In view of the above, before recovering input tax, a taxable person needs to substantiate that in addition to receiving a tax invoice, he has also satisfied the condition of forming an intention to make the payment within the prescribed period.
What if the Input VAT is not recovered with in prescribed time period?
Where the input tax is not recovered in the tax period in which both the conditions are satisfied, the taxable person can recover the input tax in the immediate next tax period. If the taxable person fails to recover the Input VAT in subsequent tax period also, he is required to submit a voluntary disclosure.
What if the consideration is not paid with in prescribed time limit?
If the Taxable person fails to pay the consideration with in six months from agreed date:
Article prepared by: Mr. NAIMABBAS A VIRANI
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