Time-Frame For Recovering Input Tax

VAT pic Time-Frame For Recovering Input Tax

A recent FTA’s published ‘Public Clarification on the Time Frame for Recovering Input Tax’. According to the clarification, inputs tax can be claimed when:

  1. the tax invoice is received; and
  2. an intention to make the payment of consideration of the supply before the expiration of six months after the agreed date of payment is formed.

At glance:

  • Input tax can be claimed only when the above stated two conditions are met;
  • If a tax invoice is received in one tax period but the intention is to make the payment in the next tax period, the input tax can only be claimed in the next tax period;
  • when input tax is not claimed in the tax period where both the conditions are met, the taxpayer can claim the input tax in the immediate next tax period;
  • If input tax is not claimed in the first two tax periods, a taxpayer is required to submit a voluntary disclosure in order to claim the input tax. If a voluntary disclosure is submitted to claim an input tax, the taxpayer should amend the input tax reported in the VAT return of one of the two tax periods;
  • If the payment is not made before the expiration of six months after the agreed date of payment, the input tax should be reduced in the VAT Return following the expiry of the six-month period; and
  • The taxpayer can again recover the input tax after the payment.

Read the full article  FTA Website

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