The Federal Tax Authority (FTA) has released the updated VAT Guide on Input Tax Apportionment (VATGIT1) in September 2025, this update brings significant structural changes, introduces new concepts such as the Specified Recovery Percentage (SRP), and aligns the guidance with the latest VAT and tax procedure regulations.
Businesses registered for VAT in the UAE should carefully review these changes to ensure accurate Input Tax recovery and maintain compliance.
Introduction of the Specified Recovery Percentage (SRP)
(A major new mechanism — effective 15 November 2024)
What is SRP?
The SRP is a pre-approved single Input Tax recovery rate that a Registrant can use for the entire next Tax year instead of calculating the apportionment rate every Tax Period.
Eligibility
- Must be VAT registered for at least 12 months.
- Should make both recoverable and non-recoverable supplies.
- Application must be submitted by an authorized person (Registrant, authorized signatory of Tax Group, Tax Agent, or Legal Representative).
- Tax consultants or other third parties without authorization can’t apply.
How it works?
- The SRP is based on the preceding Tax year’s recovery rate:
- If using an approved special apportionment method — apply the preceding tax year’s recovery rate from that method.
- If eligible for a special method but haven’t applied — the SRP must still be calculated using the relevant special method as prescribed by the FTA.
- If no special method applies — SRP is determined using the standard inputs-based apportionment calculation for the preceding tax year.
An FTA decision approving the use of the SRP is valid for four years, and the Registrant must retain the method for a minimum of two years before requesting a change.
Revised FTA Response & Processing Timelines
FTA decision response times
The Federal Tax Authority (FTA) has clarified the timeframes within which it will respond to applications:
- 40 Business Days for decisions on non-sectoral special apportionment methods.
- 60 Business Days for decisions on sectoral methods.
Applicant Response Deadlines via EmaraTax
Applicants must now adhere to clearer response deadlines when the FTA requests additional information:
- A response must be submitted within 40 Business Days of the FTA’s request.
- Applications not completed and submitted within 40 Business Days from initiation may be closed automatically by the FTA.
New 10% Variance Notification Rule
- Registrants approved for a special apportionment method must monitor annual recovery rates.
- If the actual recovery rate at year-end differs by more than 10% from the rate originally submitted in the application:
- Notify the FTA within 20 Business Days of discovering the variance.
- Submit supporting calculations, annual washup details, and explain reasons for the deviation.
⚠️ Risk of Non-Compliance: Failure to notify may result in FTA withdrawing approval for the special method from the date on which a variance had been identified.
Clarified Renewal & Re-application Process
- If registrant want to continue using a special apportionment method or SRP after its expiry, must re-apply before the approval ends.
- If no renewal is filed before expiry → registrant automatically revert to the standard inputs-based apportionment.
- Submit a comparative overview of recovery rates from the original and new application, explaining any significant fluctuations.
Conclusion
The September 2025 updates bring both simplification and stronger oversight. The new SRP option reduces ongoing calculation work, while the clearer FTA timelines and the 10% variance reporting rule increase compliance responsibility.
💼 Need Help?
Stay compliant without the stress — the VAT team at RVG can help with SRP applications, variance reporting, and EmaraTax filings, so you can focus on growing your business. Book your free consultation through the link and let our experts handle the rest.
