How is residual input VAT apportioned in the UAE?
Using the standard method in the FTA real estate guide: VAT wholly for taxable supplies is recovered, VAT wholly for exempt supplies is blocked, and the rest is apportioned by taxable supplies divided by taxable plus exempt supplies, rounded to the nearest whole percent. A special method, such as floorspace, needs written FTA approval.
On this page
The floorspace method
For businesses selling and renting commercial and residential property, the FTA allows apportionment by the share of floorspace used for taxable activity, once approved in writing.
Who meets this
Landlords with mixed portfolios, mixed-use buildings, and contractors who also earn exempt rental income from residential property they own.
Under the standard method, the percentage is worked out from the values of supplies, so a landlord whose mix of taxable and exempt rent changes during the year will see its recoverable share move with it.
How SupaJack Construct helps
Supplier bills in SupaJack Construct record the VAT charged with the supplier's TRN, and projects keep their own costs, so the input VAT on each development can be identified for recovery or apportionment.
Related tools and guides
See the VAT guide for contractors, the VAT calculator, the payment certificate calculator, the retention calculator, finance and VAT in SupaJack Construct, the answer on whether a payment certificate triggers VAT and the meaning of e-invoicing.
Worked example
A landlord's taxable supplies are AED 3,000,000 and exempt supplies AED 1,000,000. The recoverable share is 75%. On AED 40,000 of residual VAT for roof repairs, it recovers AED 30,000.
Questions people ask
Is rounding applied?
Yes, to the nearest whole number.
Can floorspace be used?
With written FTA approval.
Is VAT on exempt-only costs recoverable?
No.