What is the time limit for recovering input VAT?

Article 55 - Recovery of Recoverable Input Tax in the Tax Period23,24 1. Taking into consideration the provisions of Article 56 of this Decree-Law, the recoverable Input Tax may be deducted through the Tax Return relating to the first Tax Period in which the following conditions have been satisfied: a. If any of the following cases has occurred: 1) The Taxable Person receives and retains the Tax Invoice as per the provisions of this Decree-Law, provided that the Tax Invoice includes the details of the supply related to such Input Tax, or keeps any other document pursuant to Clause 3 of Article 65 of this Decree-Law in relation to the supply on which Input Tax was paid. 2) The Taxable Person imports the Goods, and receives and retains invoices and Import documents in accordance with the provisions of this Decree-Law and its Executive Regulation in relation to the Import on which Input Tax was paid or declared. 3) The Taxable Person imports the Services, and receives and retains invoices in accordance with the provisions of this Decree-Law and its Executive Regulation in relation to the Import on which Input Tax was declared. b. The Taxable Person pays the Consideration or any part thereof, as specified in the Executive Regulation of this Decree-Law. c. The Taxable Person must retain the Tax Invoice in accordance with the Electronic Invoicing System, where it is required to be issued or has been issued in the format of an Electronic Invoice. d. Any other condition as may be prescribed by the Cabinet based on the proposal 23 Article amended as per Federal Decree-Law No.18 of 2022. 24 Article amended as per Federal Decree-Law No. 16 of 2024. Federal Decree-Law No. 8 of 2017 and its amendments – As published by the Ministry of Finance 27 of the Minister. 2. If the Taxable Person entitled to recover the Input Tax fails to do so during the Tax Period in which the conditions stated in Clause 1 of this Article have been satisfied, he may include the recoverable Input Tax in the Tax Return for the subsequent Tax Period.

Article 74 - Excess Recoverable Tax32 1. Subject to the provisions of the Tax Procedures Law and its Executive Regulation, and without prejudice to the Authority's right to offset in accordance with the provisions of Clause 2 of this Article, the Taxable Person shall be entitled to apply to the Authority to recover excess Recoverable Tax, or part thereof, in accordance with the time limits and procedures specified in the Executive Regulation of this Decree-Law, in the following cases: a. If the Taxable Person’s recoverable Input Tax set forth in this Decree-Law exceeds the Output Tax payable for the same Tax Period. b. If the Tax paid to the Authority by the Taxable Person exceeds the Payable Tax according to the provisions of this Decree-Law, other than in the instance mentioned in Paragraph (a) of Clause 1 of this Article. 2. The Authority shall offset the excess Recoverable Tax against the Payable Tax or 32 Article amended as per Federal Decree-Law No. 18 of 2022. Federal Decree-Law No. 8 of 2017 and its amendments – As published by the Ministry of Finance 35 any Administrative Penalties imposed in accordance with the provisions of this Decree-Law or Tax Procedures Law. 3. If no request is submitted to recover the excess after offsetting, the excess shall be carried forward to subsequent Tax Periods for a period not exceeding (5) five years from the end of the Tax Period in which the excess arose. In the event that no request to recover the excess has been submitted or it was not used to settle any Tax liabilities before the expiry of this period, the right to claim such excess shall lapse and may not be used to settle any Tax liabilities. 33 Chapter Four – Other Provisions on Recovery of Tax

VATP017 VAT Public Clarification توضيح عام بشأن ضريبة القيمة المضافة Time-frame for recovering Input Tax اإلطار الزمني السترداد ضريبة المدخالت الموضوع Issue Article 55 of the Federal Decree-Law No. 8 of 2017 )8( ) من المرسوم بقانون اتحادي رقم55( حدّدت المادة on Value Added Tax (“VAT Law”) prescribes the في شأن ضريبة القيمة المضافة ("المرسوم2017 لسنة time-period within which input tax should be بقانون") الفترة الزمنية التي يجب استرداد ضريبة المدخالت recovered by a taxable person. .خاللها من قبل الخاضع للضريبة This Public Clarification clarifies the FTA’s position يوضح هذا المستند موقف الهيئة االتحادية للضرائب relating to the interpretation of Article 55 of the إذ،) من المرسوم بقانون55( ("الهيئة") بشأن تفسير المادة VAT Law and discusses the time-period within يتناول الفترة الزمنية التي يجب خاللها استرداد ضريبة which the input tax must be recovered. This Public كما يناقش هذا التوضيح العا ّم الحلول المتاحة.المدخالت Clarification also discusses the recourse available للخاضعين للضريبة في الحاالت التي ال يتم فيها استرداد ّ to taxable persons in the instance where input tax .ضريبة المدخالت خالل الفترة الزمنية المحددة is not recovered within the prescribed time-period. ملخص Summary Input tax must be recovered in the first tax period يجب استرداد ضريبة المدخالت في الفترة الضريبية األولى in which two conditions are satisfied: :التي يتحقق فيها الشرطان اآلتيان a. the tax invoice is received; and استالم الفاتورة الضريبية؛ و .أ b. an intention to make the payment of نشوء القصد بدفع مقابل التوريد قبل انقضاء مدة ستة.ب consideration of the supply before the .أشهر بعد التاريخ المتفق عليه لدفع مقابل التوريد expiration of six months after the agreed date of payment is formed. Upon receipt of a tax invoice, a taxable person can يكون بإمكان الخاضع للضريبة،عند استالم فاتورة ضريبية recover input tax only when an intention to make استرداد ضريبة المدخالت فقط عند نشوء القصد بدفع مقابل the payment within a prescribed period is formed. في حال نشأ، وبالتالي.التوريد خالل فترة زمنية محددة Therefore, if the intention to make the payment is القصد بالدفع خالل فترة ضريبية الحقة للفترة الضريبية التي 1

   where the taxable person’s tax period ends on 31 January and quarterly thereafter, the tax year ends on 31 January; where the taxable person’s tax period ends on last day of February and quarterly thereafter, the tax year ends on the last day of February; and where the taxable person’s tax period ends on March and quarterly thereafter, the tax year ends on 31 March. 2. For a taxable person registered for VAT on a monthly tax period basis, the tax year ends on the last day of the calendar year. The annual wash-up calculation requires the taxable person to:   calculate the residual input tax which would have been recoverable if the residual input tax calculations were done for the whole tax year; and compare the residual input tax calculated for the entire year with the residual input tax actually recovered in all the tax periods throughout the tax year. If the above comparison shows a difference, a corresponding adjustment must be made in the first tax period following the end of the relevant tax year. The adjustment will result in either additional recoverable input tax or a reduction in the input tax already recovered. Furthermore, if there is a difference of more than AED 250,000 in any tax year between the recoverable input tax as calculated in accordance with the method described in this section and the input tax which would have been recoverable if the calculation was made on the basis of the actual use of the goods or services, then the taxable person should make an adjustment to the input tax in respect of the difference. The adjustment must be made in the first tax period following the end of the relevant tax year. If the difference is less that AED 250,000, no adjustment is required to be made. 10.5. Conditions to be met to allow recovery of input tax A taxable person is able to recover input tax in the first tax period in which both of the following conditions are met:   the taxable person has received and retained a tax invoice or other documentation evidencing the supply or import; and the amount of VAT in question has been paid in whole or in part (in which case the amount of recoverable input tax shall be limited to the equivalent amount). If the taxable person has not recovered input tax in the tax period in which the conditions have been met, the person will be able to recover this input tax in the following tax period. 38 VAT Guide | Taxable Person | VATG001

Article 56 – Adjustment of Input Tax Post-Recovery 1. If Input Tax has been recovered because it was attributed to supplies as specified in Clause 1 of Article 54 of the Decree-Law but, before the consumption of the Goods or Services upon which that Input Tax was incurred the Input Tax became not so attributable, then the Taxable Person shall be required to repay that Input Tax. 2. If Input Tax has not been recovered because it was not attributed to supplies specified in Clause 1 of Article 54 of the Decree-Law but, before the consumption of the Goods or Services upon which that Input Tax was incurred, the Input Tax became attributable to supplies as specified in Clause 1 of Article 54 of the DecreeLaw, then the Taxable Person shall be able to recover Input Tax attributable to the use of the Goods or Services for making such supplies. 40 Clause added as per Cabinet Decision No. 149 of 2026 as follows (shall come into effect from the first Tax year commencing after 1 October 2027): For the purposes of paragraph (d) of Clause 6 of this Article, Government Entities and Charities shall calculate the recoverable Input Tax as follows: a. Government Entities and Charities shall calculate the percentage of the recoverable Input Tax pursuant to Clause 1 of Article 54, and Article 57 of the Decree-Law, to the total recoverable Input Tax and non-recoverable Input Tax for the Tax Period. b. The percentage calculated under paragraph (a) of this Clause shall be rounded to the nearest whole number. c. The percentage calculated under paragraph (b) of this Clause shall be multiplied by the amount of Input Tax referred to in paragraph (d) of Clause 6 of this Article to establish the recoverable portion of that Input Tax. Cabinet Decision No. 52 of 2017 and its amendments – As published by the Ministry of Finance 47 3. If Input Tax has been treated as subject to apportionment to calculate the Input Tax that could be recovered, but before the consumption of the Goods or Services upon which that Input Tax was incurred, the use of that Input Tax changes, then it shall be adjusted as follows: a. If it becomes attributable to supplies as specified in Clause 1 of Article 54 of the Decree-Law then the Taxable Person shall be able to recover Input Tax not previously recovered to the extent that it is attributable to the use of the Goods or Services for making such supplies. b. If it ceases to be attributable to any supplies specified in Clause 1 of Article 54 of the Decree-Law then the Taxable Person shall be required to repay that Input Tax. 4. The adjustments for change in use of Goods or Services under this Article shall be made only if all of the following conditions are met: a. The change in use occurred within five years of the Date of Supply of the relevant Goods and Services. b. The Taxable Person is not required to adjust the same Input Tax under mechanisms provided in Articles 55 and 57 of this Decision in which case those mechanisms will apply. Title Twelve – Capital Asset Scheme