FTA Decision 2/2025 — Amending the FTA policy on clarifications and directives

Factual summary

Restated the Policy on Issuing Clarifications and Directives from 1 March 2025. Compared with the 2024 version, it limits private clarifications to technical matters of uncertainty, ends a private clarification once a public clarification or guide covers the same issue, and lets VAT registrants of at least 12 months apply to use a specified recovery percentage based on the preceding tax year. It also opened applications for unilateral advance pricing agreements from the fourth quarter of 2025.

What it means in practice Professional insight

Who: taxpayers relying on private clarifications and partially exempt VAT businesses. What to check: whether a public clarification or guide has overtaken a private clarification, the 12-month registration condition for a specified recovery percentage, and the current policy version under FTA Decision No. 5 of 2021.

Key provisions

• Art. 1 The Authority issues clarifications and directives in accordance with the attached policy, as amended by decision of the Board at its 36th meeting on 13/12/2024.
• Section II The legal references were updated: Art. 30(6) of the VAT Executive Regulation (the Authority may refuse documents that are not sufficient evidence of export), and Art. 55(13), (14), (16) and (18) on alternative bases of input tax calculation, a specified recovery percentage and the Authority's notification of the approved method.
• Section III.1 Private clarifications now cover technical tax matters of uncertainty within the scope of the request; a request may be refused where it rests on a hypothetical scenario that does not meet the requirements for a clarification, and a clarification cannot address transactions or arrangements covered by Art. 50 of the Corporate Tax Law (general anti-abuse rule) or similar treaty provisions.
• Section III.1 A later clarification on the same subject supersedes the earlier one from its issue, and a private clarification ceases to have effect from the date the Authority issues a public clarification or guide on the same issue.
• Section IV.2 A taxable person may apply to use a specified recovery percentage based on the preceding tax year (Art. 55(16) of the VAT Executive Regulation): for business sectors in FTA Decision No. 8 of 2022 the preceding year's percentage is the one calculated under the sector mechanism, and for others using the standard method it is the actual recovery percentage under Clauses 9, 10 and 11 of Art. 55; such a request requires VAT registration for at least 12 months (6 months for other apportionment requests).
• Section IV.3 Applications for unilateral advance pricing agreements are received from the 4th quarter of 2025; the date for other advance pricing agreement applications is to be announced after that date.
• Art. 2 Published in the Official Gazette and effective as of 1 March 2025.