Input VAT Apportionment Errors: Disclosure

Apportionment errors affect businesses making both taxable and exempt supplies: input VAT recovered at the wrong ratio because the exempt-taxable split was mismeasured or the method misapplied. The disclosure recomputes the correct attribution per period with the full workings — total input tax, the split, the method — because the FTA re-performs the calculation. A one-line adjustment without workings will be questioned; a transparent recomputation with the method stated usually is not.

Timing and payment work differently for input VAT surrenders but the economics are the same: the surrendered input tax increases the net VAT payable per period, and the 1% monthly voluntary disclosure penalty runs from each period's original due date to the disclosure date. Pay the resulting difference on filing day. And the 20-business-day clock runs from when the invalid claim was identified — often during a purchase-ledger review — so date the discovery memo to the review, not to the filing decision.

A disclosure is only as strong as its evidence. Before starting the form, assemble the discovery memo (what was found, when, by whom), the original filed figures for each affected period, the corrected figures with a clear reconciliation between the two, and the source documents behind the correction — tax invoices, contracts, bank statements, import declarations, or payroll records as the error type requires. Keep everything for at least five years: Article 3 of Cabinet Decision No. 74 of 2023 (the Executive Regulation of the Tax Procedures Law) requires tax records to be retained for five years after the end of the relevant tax period (seven years for corporate tax under Article 56 of Federal Decree-Law No. 47 of 2022), and the FTA can ask to see the file behind any disclosure inside that window. A complete, dated file also protects you if the same error is ever questioned again — you can show exactly what was disclosed and when.

Errors do not expire quickly. Tax records must be kept for five years after the end of the relevant tax period, and the FTA's assessment powers run on a similar horizon — longer where evasion is suspected. Practically, this means a voluntary disclosure should sweep every affected period inside the window, not just the most recent one: correcting 2025 while leaving the same 2023 error in place invites the FTA to find the older one itself, at which point the voluntary route is closed for that period. When you discover an error, ask whether the same mistake happened in earlier periods before you file — one complete disclosure covering all affected periods is cheaper and safer than a drip-feed of corrections.