Floorspace method of apportionment for recoverable and non-recoverable VAT

The floorspace method deals with supplies (sales and rental) of commercial and residential properties, including real estate companies.

The floorspace method deals with supplies (sales and rental) of commercial and residential properties, including real estate companies. This method calculates the apportionment percentage for residual input tax by identifying the proportion of the floorspace used for taxable activity as a percentage of the total floorspace used by the business.

{ Floorspace (in sqm) used in taxable activity / Total floorspace (in sqm) }X 100

The floorspace method is used when it is possible to identify when a specific area is used in a taxable or exempt activity.

Who can apply for Special Apportionment Method

A registrant may apply to the FTA for permission to use a special method of input tax apportionment instead of standard apportionment method who can provide evidence that the special method of apportionment will be more appropriate than the standard method. Following are the conditions to be eligible to apply for special apportionment method.

  • The applicant has been registered for VAT for at least 6 months.
  • The applicant makes both taxable supplies and exempt supplies.
  • The standard method of input tax apportionment does not give a fair and reasonable result to input tax recovery.
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