UAE Federal Tax Authority issued Guide on "Input Tax Apportionment: Special Methods - VAT Guide | VATGIT1"
There are three clean methods & one hybrid method recommended in the process.
Method Type |
Who can adopt? |
Outputs based method |
The outputs based method is available for companies engaged in the following sectors: |
Transaction Count method |
Transaction count method is available to banks (Islamic and non-Islamic) engaged in wholesale and investment trading activities, since costs incurred in the course of such activities are generally similar per trade regardless of the trade’s value. |
Floorspace method |
The floorspace method is available to businesses which deal with supplies (sales and rental) of commercial and residential properties, including real estate companies and other businesses which sell or rent out real estate on an ongoing basis, where expenses would be similar for floorspace regardless of whether used for making exempt or taxable supplies. |
Sectoral method |
Sectoral methods will be used by large, complex banks and insurance companies, which operate through different divisions – e.g. banks which have retail and investment banking divisions; or insurers where they write life and non-life contracts. |
Division segregation can be done, using below methods: |
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Once Division segregation is done, adopt any of the method based on division activity: |
In Jan 2020, perform the loopback for 2019 input tax claimed, where you are having mixed input tax and initiate working / plan for 2020 input tax claim methodology.
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