Tanvi Fal Dessai
Article 55 of the Federal Decree-Law No. 8 of 2017 on Value Added Tax lays out the period in which the taxed entity expects to be recovering the input tax.
This Public Clarification clarifies the FTA’s status concerning the application of Article 55 of the Law on VAT and addresses the input tax recovery timing. This Public Clarification further addresses the recourse applicable to taxed individuals when the tax on inputs is not collected under the specified limits.
One should recover input tax in the first tax year under which two requirements should be met:
After receiving a tax invoice, a taxable individual can recover an input tax only if the plan to make the payment is made within the prescribed time.
Therefore, if the plan to make the payment is expressed in a tax period (i.e., after the tax period in which the tax invoice is charged), the input tax may be received in the later tax period.
In the light of the above, before recovering input tax, a taxable person must show that, in addition to obtaining a tax invoice, he has already fulfilled the condition of the intention to make the payment within the prescribed time.
To prevent questions, please note that if a tax invoice is paid in one tax period and the intention to make the payment is made in a later tax period, the input tax will only be collected in that last tax period.