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Supply under VAT - UAE


Supply under VAT - UAE

What is a supply?
A supply refers to goods or services that are exchanged for consideration. A supply occurs when there is a transaction between two persons and at least one of them is a registered taxpayer. Buying, selling, and stock transfers are all supplies, even if there is no exchange of money.

You can also think of a supply as a transfer of goods or services between two people in the UAE, in which the goods or services that are supplied are meant to advance the business of at least one person involved in the transaction. It can mean buying goods for selling them, outsourcing a service, conducting imports or exports, and more.

What are the components of supply under VAT?
A supply under VAT has three attributes that are used to calculate the tax owed for the transaction: place, value, and time.

Types of supply under VAT

Under the UAE VAT, supplies can be classified as:

Application of VAT on Goods and Services

When the supply of goods or services happens partly before and after the date of VAT implementation, there are a few factors to keep in mind before deciding whether VAT is applicable on the supply or not.

Goods

Supply Payment Is VAT applicable?
Supply of goods before 2018 Payment made in 2018 No
Supply of goods in 2018 Payment made before 2018 (partial or full) Yes

Services

Supply Payment Is VAT applicable?
Supply of services before 2018 Payment made in 2018 No
Supply of services in 2018 Payment made before 2018 (full) Yes
Supply of services partly in 2017 and 2018 Payment made before 2018 Only on services in 2018

Contracts
In case of contracts, VAT can be accounted by the supplier or the recipient. Let’s look at cases where this would be applicable.

Amount in Contract Who pays VAT?
Exclusive of VAT VAT is paid by the Recipient
Inclusive of VAT in the contract VAT is paid by the Supplier

In case the contract does not mention VAT, then the amount is treated as inclusive of VAT.

If the recipient is registered for tax and able to recover it, then the amount is treated as exclusive of tax.



       
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