Input Tax Apportionment

Short brief

VAT is a general consumption tax on the supply of Goods and Services, that applies to most supplies which take place within the territorial area of the UAE.

Purpose of this document

The purpose of this Guide is to provide guidance on Input Tax apportionment and the special Input Tax apportionment methods which may be used by certain types of entities where the standard Input Tax-based apportionment method does not yield a fair and reasonable result.

The Guide provides:

• an overview of the general Input Tax apportionment rules, the available special methods of Input Tax apportionment, and the determination of the SRP, and

• an overview of the process to apply for approval to use a special Input Tax apportionment method and/or the SRP.

For any additional questions regarding the process to apply for approval to use a special Input Tax apportionment method and/or the SRP, please contact info@tax.gov.ae.

Who should read this document?

This document should be read by any Registrant who makes a mixture of Taxable Supplies and Exempt Supplies or non-business activities, and any other Person responsible for or involved with the apportionment calculation for such a Business.

Legislative references

In this Guide, the following legislation will be referred to as follows:

• Federal Decree-Law No. 8 of 2017 on Value Added Tax and its amendments is referred to as "Decree-Law",

• Federal Decree-Law No. 28 of 2022 on Tax Procedures and its amendments is referred to as "Tax Procedures Law",

• Cabinet Decision No. 52 of 2017 on the Executive Regulation of the Federal Decree-Law No. 8 of 2017 on Value Added Tax, and its amendments, is referred to as "Executive Regulation",

• Cabinet Decision No. 74 of 2023 on the Executive Regulation of Federal Decree-Law No. 28 of 2022 on Tax Procedures is referred to as "Tax Procedures Executive Regulation",

• Federal Tax Authority Decision No. 8 of 2022 on the Special Methods of Input Tax Apportionment is referred to as "FTA Decision No. 8", and

• Federal Tax Authority Decision No. 2 of 2025 on the Authority's Policy on Issuing Clarifications and Directives is referred to as "FTA Decision No. 2".

Status of the Guide

This Guide is not a legally binding document, but is intended to provide assistance in understanding and applying the VAT legislation with regards to Input Tax apportionment, special methods for Input Tax apportionment, and the SRP.

The information provided in this Guide should not be interpreted as legal or Tax advice. It is not meant to be comprehensive and does not provide a definitive answer in every case. It is based on the legislation as it stood when the Guide was published. Each Person's own specific circumstances should be considered.

The Decree-Law, Executive Regulation, and FTA Decisions referred to in this document will set out the principles and rules that govern the application of Input Tax apportionment, special methods for Input Tax apportionment, and SRP. Nothing in this publication modifies or is intended to modify the requirements of any legislation.

This document is subject to change without notice.

Introduction

Persons conducting Business activities in the UAE incur VAT on Goods and Services, which is referred to as Input Tax. Registrants can recover Input Tax via the normal Tax Return process, subject to certain conditions being met. Consequently, VAT should, generally, not be a cost to a Registrant where such expenditure is incurred to make Taxable Supplies. However, where the Taxable Person is not able to recover the VAT incurred in respect of Goods or Services, the Person is, in effect, treated as the end consumer of those Goods or Services, and VAT becomes a cost to the Business.

Entitlement to recover Input Tax

A Registrant is entitled to recover Input Tax incurred on the purchase of Goods and Services to the extent such Goods and Services are used, or intended to be used, in making any of the following:^[1]

• Taxable Supplies,

• supplies that are made outside the UAE which would have been considered taxable had they been made in the UAE, and

• supplies of financial Services which would have been treated as exempt if made in the UAE, but which are provided to a Person who is outside the UAE at the time of the supply, and the Services are treated as taking place outside the UAE.^[2]

A Taxable Person is entitled to full Input Tax recovery in respect of Goods and Services wholly used (or intended to be used solely) for any of the above purposes. In contrast, where the Goods or Services are used (or intended to be used) solely for non-business purposes or to make wholly Exempt Supplies, the Person will not be able to recover any of the Input Tax incurred.

In certain circumstances, Goods or Services will be used partly in the course of making supplies that allow the recovery of Input Tax and partly for other purposes that do not allow Input Tax recovery. Where an expense is incurred for the making of such mixed supplies, the Taxable Person must determine the actual portion of the Input Tax on the expense that can be recovered.

Input Tax apportionment per Tax Period

Input Tax which is incurred in respect of Goods or Services which are used partly for making supplies that allow for VAT recovery and partly for other purposes for which VAT is not recoverable is referred to as "Residual Input Tax". Residual Input Tax must be apportioned between those activities. Recovery will be restricted to the portion relating to supplies that allow for VAT recovery.

Step 1: Direct attribution

To identify the amount of the Residual Input Tax, the Input Tax which is either recoverable or non-recoverable in full has to be excluded. Therefore, the first step is to perform the following calculations in respect of each Tax Period:^[3]

• Calculate the total value of Input Tax which is directly attributable to supplies for which VAT may be recovered under Article 54(1) of the Decree-Law, i.e. Wholly Recoverable Input Tax.

• Calculate the total value of Input Tax which is directly attributable to supplies for which VAT cannot be recovered.

Note that Input Tax which is specifically blocked under Article 53 of the Executive Regulation shall be excluded from this calculation.

Step 2: Residual Input Tax

Any Input Tax incurred which cannot be directly attributed to the making of supplies in respect of which Input Tax is wholly recoverable or wholly non-recoverable constitutes the Residual Input Tax of the Taxable Person.

Step 3: Apportionment Rate

The next step is to determine the percentage of Residual Input Tax that may be recovered, i.e. the Apportionment Rate. The standard method for apportioning the Residual Input Tax, as described in Article 55(6) of the Executive Regulation, is referred to as the inputs-based apportionment method and is calculated as follows:

Where:

• a = Wholly Recoverable Input Tax

• b = Wholly non-recoverable Input Tax

The percentage should be rounded to the nearest whole number.^[4]

Examples of rounding:

Step 4: Recoverable Input Tax

The recoverable portion of the Residual Input Tax is calculated by multiplying the total value of Residual Input Tax by the Apportionment Rate calculated under Step 3 above.

To calculate the total Recoverable Input Tax for the Tax Period, the recoverable portion of the Residual Input Tax shall be added to the Wholly Recoverable Input Tax determined under Step 1.

This calculation is required to be performed for each Tax Period in which the Taxable Person incurs Input Tax relating to the making of Exempt Supplies, or to activities that are not in the course of Business,^[5] unless the Registrant obtained approval from the FTA to use the SRP.

Input Tax apportionment – Annual adjustments

Registrants are required to perform two additional calculations at the end of each Tax year. The Registrant's Tax year is determined by the registration stagger and may be different than the calendar year and the Registrant's financial year.^[6]

If the Registrant's Tax year ends on a date other that the financial year-end, the Registrant may submit a request to the FTA via EmaraTax to amend the stagger to align these two dates.

The first calculation is to perform an annual washup and the second is to calculate an actual use adjustment. If the FTA approved the use of a special apportionment method, the Registrant is not required to calculate the actual use adjustment for the Tax years during the validity period of the approved decision.

Special cases for Tax year-end

As Registrants are assigned Tax Periods in staggers as outlined above, each Registrant is required to determine its Tax year-end accordingly. In certain cases, a Registrant's Tax year-end may differ from the registration stagger assigned. Article 55(4) of the Executive Regulation specifies the following special cases which trigger the end of a Tax year:

#	Special case	Tax year-end
1	Deregistration	The last day on which the Registrant is a Taxable Person.
2	Joining a Tax Group	The last day before the Registrant joins the Tax Group, i.e. the day before the effective date of joining the Tax Group.
3	Leaving a Tax Group	The last day before the member left the Tax Group, i.e. the day before the effective date of the Tax Group's amendment.

Annual washup and actual use adjustment

At the end of the Registrant's Tax year, the Registrant is required to perform an annual washup calculation as described below and report the result in the adjustment column of Box 9 of the first Tax Return following the end of the Registrant's Tax year:

Step 1: Combine Input Tax recovered in returns submitted during Tax year

Combine the Input Tax recovered during each of the Tax Periods forming part of that Tax year by adding Boxes 9 and 10 of all the relevant Tax Returns submitted together.

Step 2: Recalculate Recoverable Input Tax

Recalculate Recoverable Input Tax for the Tax year as if it was a single Tax Period.^[7] The same principles (i.e. direct attribution and Residual Input Tax) apply as in Step 1 of Section 3.3. Note that the amount of the Residual Input Tax should remain the same, but the Apportionment Rate for this calculation may vary as the intention is to smoothen the percentage by removing, for example, seasonal fluctuations. In instances where the FTA approved the use of a special apportionment method, the annual washup calculation shall be performed using the approved special apportionment method, until the expiry of the approved decision.

Step 3: Calculate annual washup adjustment

Deduct the total Recoverable Input Tax calculated in Step 1 from the amount calculated in Step 2 to calculate the annual washup adjustment.

Kindly note that, for the purpose of calculating the annual washup adjustment, there is no threshold on the adjustment amount arising from the annual washup calculation. Consequently, the resulting adjustment may be either positive or negative.

Example 1

Company A, a small retail bank, is a Registrant that makes both Taxable Supplies and Exempt Supplies. Company A incurs Input Tax related to wholly Taxable Supplies, Input Tax related to wholly Exempt Supplies, and Input Tax used for mixed purposes (i.e. Residual Input Tax).

Tax year	Wholly Recoverable Input Tax	Wholly non-recoverable Input Tax	Residual Input Tax
Quarter 1	2,000,000	3,000,000	10,000,000
Quarter 2	3,000,000	3,000,000	12,000,000
Quarter 3	3,000,000	3,000,000	8,000,000
Quarter 4	1,000,000	9,000,000	5,000,000
Total	9,000,000	18,000,000	35,000,000

The Recoverable Input Tax per the Tax Returns is as follows:

The total Residual Input Tax recovered per the Tax Returns submitted for the calendar year is AED 14,500,000.^[8]

Based on the above, the annual washup adjustment is calculated as the difference between the recoverable Residual Input Tax per the returns submitted (AED 14,500,000) and the recoverable Residual Input Tax per the annual calculation (AED 11,550,000), i.e. AED 2,950,000. In this case an excess amount of Input Tax was recovered via the Tax Returns.

Actual use adjustment

After performing the annual washup calculation, the Registrant is required to calculate the difference between the Recoverable Input Tax per the annual washup calculation and the Input Tax which would have been recoverable if an Apportionment Rate based on actual use was used.

The Registrant shall only make an actual use adjustment where the difference in the Recoverable Input Tax amounts between the annual washup and the actual use calculations exceeds AED 250,000.^[9]

Example 2

Registrant	Recoverable Residual Input Tax		Variance	Actual use adjustment required
	Annual washup calculation	Actual use calculation
Company 1	900,000	500,000	400,000	Yes
Company 2	900,000	750,000	150,000	No
Company 3	900,000	1,200,000	(300,000)	Yes
Company 4	900,000	1,000,000	(100,000)	No

If the Registrant's Tax year is less than 12 months, the AED 250,000 needs to be prorated accordingly.^[10] For example, if the Business is newly established and its Tax year consisted of only nine months, the AED 250,000 threshold is reduced to AED 187,500 (e.g. AED 250,000 × 9/12).

Kindly note, that for purposes of the actual use calculation, the Registrant is required to use one of the special apportionment methods described in Chapter 4 in this Guide, taking into account the guidelines on which special methods can be used by certain types of Businesses.

Example 3

Company A (same as in Example 1) is eligible to use the outputs-based special method for determining whether an actual use adjustment is required. Company A made the following supplies during its Tax year:

• Taxable Supplies: AED 40,000,000

• Exempt Supplies: AED 360,000,000

• Residual Input Tax per annual washup calculation: AED 35,000,000

• Recoverable Residual Input Tax per annual washup calculation: AED 11,550,000

Step 1: Calculate the recoverable Residual Input Tax based on the alternative special method

The Residual Input Tax recovery rate, using the outputs-based method^[11] is calculated as follows:

Taxable Supplies (40,000,000)Taxable Supplies (40,000,000) + Exempt Supplies (360,000,000)× 1001= 10%

The recoverable Residual Input Tax under this method is AED 35,000,000 × 10% = AED 3,500,000.

Step 2: Calculate the difference between recoverable Residual Input Tax per the annual washup and actual use calculations

Recoverable Residual Input Tax per annual washup calculation	AED 11,550,000
Less: recoverable Residual Input Tax per actual use calculation	(AED 3,500,000)
Difference	AED 8,050,000

Step 3: Determine whether an actual use adjustment is required

Since the variance calculated in Step 2 is more than AED 250,000, Company A is required to make an actual use adjustment.

Step 4: Calculate the total year-end adjustment related to recoverable Residual Input Tax

Company A is required to reduce its Input Tax recovery in the adjustments' column in its first Tax Return of the following Tax year, by the following:

Annual washup adjustment:	AED 2,950,000
Actual use adjustment:	AED 8,050,000
Total	AED 11,000,000

In summary:

Introduction

The FTA accepts that the standard inputs-based apportionment method may not be appropriate for every Registrant and its sector(s) of operation. Each Business is different, and the standard method of apportionment may give rise to outcomes that do not accurately reflect the actual use of Goods and/or Services acquired by the Registrant.

In such cases, Registrants may apply for an alternative method of Input Tax apportionment to be used.^[12] If a special Input Tax apportionment method is approved by the FTA, the Registrant shall apply the approved method from the first Tax Period following the Tax Period in which the approval was granted by the FTA.^[13] In the case of a Tax Group, the special apportionment method shall apply to the whole Tax Group as all the members of a Tax Group are regarded being a single Person represented by the representative member of the Tax Group.^[14]

The special Input Tax apportionment methods which are available to Registrants are:

• Outputs-based method,

• Transaction count method,

• Floorspace method, and

• Sectoral method.

Not every special Input Tax apportionment method will be available to every Business as FTA Decision No. 8 specifies which types of Businesses are eligible for each of the approved special Input Tax apportionment methods. This Chapter provides a summary of the Businesses that are eligible for each of the approved special Input Tax apportionment methods in accordance with FTA Decision No. 8.

Furthermore, should the FTA consider that the standard inputs-based apportionment method does not reflect the actual extent to which the Registrant's Input Tax incurred relates to making Taxable Supplies, the FTA may require the Registrant to submit an application for the use of the appropriate special apportionment method.^[15] For example, if the FTA finds during an audit that a financial institution is using the standard Input Tax-based apportionment method although the Taxable Person operates across multiple sectors, which may include real estate, retail banking and investment banking, the FTA may require that the Registrant apply to use the sectoral apportionment method.

Where a special method is approved, it will be applied for each Tax Period following the date of approval as well as for the annual washup adjustment in the first Tax Period of the following Tax year. Furthermore, on the basis that the special apportionment method already considers the actual use of Goods and Services, no actual use adjustment will be required in respect of Tax years following the approval as long as the FTA approval remains valid. The approval will typically be granted for four years in the case of a non-sectoral method and for two years in the case of the sectoral method.

Eligible Persons

Registrants that have been registered for VAT for at least six months^[16] may apply for approval to use a special apportionment method to determine the recoverable portion of Residual Input Tax.

An application to use a special Input Tax apportionment method may only be submitted by any of the following Persons:

• the authorised signatory of the Registrant, or the Registrant itself if the Registrant is a natural Person,

• the authorised signatory of the representative member of a Tax Group,

• a Tax Agent appointed by the Registrant, or

• the Legal Representative appointed by the court.

Kindly note that applications submitted by any other Person (such as a tax consultant, or natural Person submitting a request on behalf of a Registrant) will not be accepted.

Conditions for eligibility

All of the following conditions must be met for the FTA to objectively review the application to use a special method for Input Tax apportionment:^[17]

• The Applicant has been a Registrant for at least 6 months.

• The Applicant is making supplies for which they may recover the Input Tax and other supplies for which they may not recover the Input Tax.

• The Applicant can demonstrate that the standard inputs-based apportionment method does not yield a fair and reasonable result with regard to the recovery of Input Tax, and submits the required supporting documentation as part of the application.

• The Registrant is requesting to use a special apportionment method that is available to the type of Business in accordance with FTA Decision No. 8. The special apportionment methods, including the eligible Businesses are addressed below.

Outputs-based method

Transaction count method

Floorspace method

Sectoral method

Summary of available special apportionment methods

Please refer to the following table which reflects the apportionment methods that are available to different types of Businesses per FTA Decision No. 8. The FTA will reject applications where the Applicant has applied for a special Input Tax apportionment method which is not applicable to its specific type of Business.

Introduction

The Executive Regulation was amended and, from 15 November 2024, Taxable Persons may apply to use an SRP to apportion the Residual Input Tax.^[18]

Subject to FTA's approval, an SRP is determined based on the recovery rate at the end of each preceding Tax year and applied to the subsequent Tax year's Tax Periods, rather than having to calculate the relevant Apportionment Rate for each Tax Period.

Eligible Persons

Registrants that have been registered for VAT for at least 12 months^[19] may apply for approval to use an SRP.

The request may only be submitted by any of the following Persons:

• the authorised signatory of the Registrant, or the Registrant itself if the Registrant is a natural Person,

• the authorised signatory of the representative member of a Tax Group,

• a Tax Agent appointed by the Registrant, or

• the Legal Representative appointed by the court.

Kindly note that applications submitted by any other Person (such as a tax consultant, or natural Person submitting a request on behalf of a Registrant) will not be accepted.

Conditions for eligibility

To be eligible to apply for the use of an SRP, all of the following conditions must be met:

• the Applicant has been registered for VAT for at least 12 months, and

• the Applicant is making supplies for which they may recover the Input Tax and other supplies for which they may not recover the Input Tax.

How does it work?

Approval of an SRP allows the Registrant to calculate the SRP based on the preceding Tax year and apply it to the Tax Periods of the subsequent Tax year, rather than having to calculate an Apportionment Rate for each Tax Period.

The SRP is determined on the following basis:

• If the nature of the Registrant's Business is such that a special apportionment method prescribed by the FTA may be applicable to that Business, and there is approval from the FTA to use such method, the SRP should be the preceding Tax year's calculated recovery rate based on the relevant special apportionment method.

• If the nature of the Registrant's Business is such that a special apportionment method prescribed by the FTA may be applicable to that Business, but the Registrant has not applied to use such special apportionment method, the application should be for the SRP based on the relevant special apportionment method.

• If the nature of the Registrant's Business is such that none of the special apportionment methods can be applicable to the Business, the SRP is based on the preceding Tax year's calculated recovery rate, which is calculated based on the standard apportionment method.

Kindly note that an Applicant seeking to use the SRP under the sectoral special method must provide a single recovery rate applicable to the entire Taxable Person, calculated based on the sectoral special method, in accordance with Article 55(16) of the Executive Regulation, which states that a Taxable Person may apply to use a SRP. Kindly refer to example in Appendix 1.

Validity period

An FTA decision approving the use of an SRP will be valid for four years and the Registrant will not be allowed to change the method for at least two years following the approval.

Required information

The Applicant is required to provide the following information as part of the request:

• A cover letter that includes the following:

  • A detailed description of the Business activities of the Applicant,

  • The special Input Tax apportionment method to be used, and

  • The reasons for applying for a special Input Tax apportionment method.

• Historical calculations of Residual Input Tax apportionment in Excel format using the standard method of apportionment as provided in Article 55 of the Executive Regulation. The calculations should be for the period of 12 months preceding the application (as applicable). As an exception, if the Business has not conducted Business activities for at least 12 months, the calculations may be based on such shorter period.

• Calculations of the Residual Input Tax apportionment in Excel format for the same period as above but using the special method for which the Applicant is applying, and an alternative method if applicable.

Where the application is made for a sectoral method, the Applicant must provide the special apportionment method calculations for each of the sectors for which the application is made as well as a description of each of the sectors.

The historical calculations of Residual Input Tax apportionment must be based on the actual figures of the Business for the relevant period of 12 months (where it is applicable). The values should agree to the amounts reflected in the Registrant's Tax Returns submitted during the Tax year. If there are any discrepancies, reasons for the variances have to be provided to the FTA.

As part of the calculations, the Applicant should provide information substantiating the figures which are used to perform apportionment calculations for both the standard method and the chosen special method(s). For example, if the calculation indicates that the Applicant made Exempt Supplies during the 12-month period, the Applicant should explain what type of Exempt Supplies it made and why the requested special apportionment method is considered to be the most appropriate method.

In the case of a request to use an SRP, the Applicant must also submit the annual adjustment calculations covering the preceding Tax year (i.e. annual washup calculation as well as the actual use adjustment calculation, if applicable), as well as the proposed SRP to be used for the subsequent Tax year.

Where a Registrant applies for approval to use an SRP in conjunction with a sectoral special Input Tax apportionment method, the following documents must be submitted together with the application:

• The annual washup calculations for the preceding Tax year of application date, and

• Such workings should include a breakdown of each sector' recovery rate and a single recovery rate (specifically for the applicable SRP rate) for the Registrant.

Please ensure that all the information provided in the calculations reconcile to the Tax Returns which have been submitted to the FTA for the relevant Tax Periods. Should there be any differences between the calculations and the Tax Returns, please provide detailed explanations for the reason and the nature of these differences.

Rejections, requests for further information and decisions

The FTA has the right to reject the application to use a special Input Tax apportionment method and/or the SRP or request further information if it is found that the application does not include all the relevant information or contains incorrect information.

Once the application is accepted, the FTA may require up to 40 Business Days from the date the application was received, to respond to the initial Input Tax apportionment application if a non-sectoral method is selected, and up to 60 Business Days if a sectoral method is selected.

If additional information is required in respect of the lodged application, the FTA will request the additional information. The Registrant must provide their response to the request of additional information within 40 Business Days, otherwise the request may be automatically closed in EmaraTax. It may take the FTA a further 40 or 60 Business Days (based on the method selected in the application) from the date all the requested information was received to respond to the updated request for a special Input Tax apportionment method and/or the SRP.

Furthermore, if the Registrant initiates the application to use a special Input Tax apportionment method and/or the SRP via the EmaraTax portal and the application is not completed and submitted to the FTA, the FTA will send an automated email to remind the Registrant to complete the draft application after 20 Business Days to finalise the application within 40 Business Days from the date of initiating the application. Note that the FTA may automatically close the request if it is not submitted within 40 Business Days from the date of initiating the application.^[20]

If the issuance of the Input Tax apportionment decision is likely to take more than the period determined by the FTA, the FTA will inform the Applicant of the potential timeframe during which the Input Tax apportionment decision or the further information request decision shall be issued.

Kindly note that, in deciding whether to approve or reject the use of a special method and/or SRP, the FTA relies on the calculations submitted by the Applicant and does not review, nor verify, the numbers reported therein, nor the Tax treatments applied to transactions. The Applicant will have an obligation and is required to keep a record of the calculation in the event that the FTA undertakes an audit, in addition to reviewing relevant amendments to the applicable Tax legislation and guidance provided in respect of apportionment method. The Applicant will be notified of the FTA's decision via an email within 5 Business Days from the decision being made.

Validity period

Where the FTA has approved the use of a special Input Tax apportionment method and/or the SRP, the approved method and/or the SRP may be used from the first Tax Period following the date of approval, or any other date as decided by the FTA.

The approval to use a special Input Tax apportionment method will typically be granted for four years in the in the case of a non-sectoral method and for two years in the case of the sectoral method. Applicants cannot apply to change the approved method for at least two years following the approval, unless there is a significant change in the Business (see below).

An FTA decision approving the use of SRP will be valid for four years and the Registrant will not be allowed to change the apportionment method used to calculate the SRP for at least two years following the approval.

Notifications relating to change in Business

A Registrant that receives approval to use a special apportionment method may not be required to perform an actual use calculation per Article 55(11) of the Executive Regulation for the duration of the validity period of the Decision issued by the FTA. However, Registrants are still required to ensure that the Input Tax recovered during each Tax year according to the annual washup aligns with the recovery rate submitted to the FTA at the time of applying for a special method.

Although a Registrant is generally not permitted to apply to change an approved special method for at least 2 years following receiving the approval from the FTA, it is required to notify the FTA where the recovery rate calculated during the full Tax year using the approved special method differs by more than 10% from the recovery rate provided to the FTA at the time of applying to use a special apportionment method. In such cases, the Registrant would be required to notify the FTA within 20 Business Days from the date on which such difference was identified. The Registrant's notification must include all of the following:

• Confirmation of the variance and the date on which the Registrant identified the variance.

• Reasons for the difference occurring.

• Confirmation of any changes in the Business and operations of the Registrant.

• The nature and details of these changes in the Registrant's Business and operations (if any).

• Calculations for the full Tax year which have been used to identify the variance, including an annual washup calculation in Excel format.

Following the submission of the notification by the Registrant, the FTA will review the notification and supporting information and documents to consider whether the approved method is still suitable for the Registrant. Where the approved method is no longer considered suitable, the FTA may require the Registrant to submit a new Input Tax apportionment application.

The FTA may also request additional information relating to the notification and the Registrant will be required to provide a response within 40 Business Days.

Kindly note that if a Registrant fails to notify the FTA of a variance exceeding 10% within 20 Business Days or fails to provide a response to the FTA's request within 40 Business Days, the FTA may determine that the approved special method does not apply from the date on which a variance had been identified.

When to re-apply?

If the Registrant wants to continue using a special apportionment method and/or the SRP after the expiration of the previous decision, a new application must be submitted before the expiry of the most recent decision that approved the use of the special apportionment method and/or the SRP. Provided the Taxable Person submitted a request to continue using the previously approved special apportionment method before the decision's expiry date, the Registrant may continue using the previously approved method up to the end of the Tax Period during which a new decision on the request is issued by the FTA. However, should the Registrant fail to submit a renewal application before the expiry of the approved special apportionment method, the Applicant shall revert back to the standard inputs-based apportionment method from the day following the expiry thereof.

In case of any major change in the Business, the nature of the supplies and/or expense allocation principles, between the time of the original application data and the new application, such change should be highlighted to the FTA in the new application.

The new application shall include the same type of information and calculations as the original application, for a period of 12 months preceding the new application.

In the case of a request to use an SRP, the Applicant should submit the annual adjustment calculations for the preceding Tax year (i.e. annual washup calculation as well as the actual use adjustment calculation, if applicable), and the proposed SRP to be used for the subsequent Tax year.

In addition to the above, the new application shall contain a comparative overview of the recovery rates and sectors (where applicable) provided in the original application and in the new apportionment calculation requested, with an explanation of any major fluctuation in the recovery rates.