Time Frame For Recovering Input Tax

The Federal Tax Authority (FTA) of the United Arab Emirates has issued a Public Clarification No. VATP017 clarifying the FTA position, about interpretation of Article 55 of the Federal Decree-Law No. 8 of 2017 on Value Added Tax (VAT Law), regarding time-period within which input tax should be recovered by a taxable person. A summary of the subject Public Clarification is as under.

Article 55(1) of the VAT Law provides that input tax must be recovered in the first tax period in which the following conditions are satisfied:

1. The taxable person receives the tax invoice; and
2. The taxable person pays the consideration for the supply or any part thereof.

Article 54(2) of Cabinet Decision No. (52) of 2017 on the Executive Regulations of the VAT Law (Executive Regulations) by referring Article 55(1) of the VAT Law provides that a taxable person is treated as having made a payment of consideration of a supply to the extent that the person intends to make the