Value of Supply
What is the value of supply under VAT?
The value of supply is the amount that a seller collects for the supply of goods or services. It includes any expenses and charges that the supplier passes on to the buyer, such as shipping and handling charges. In other words, the value of supply is the consideration paid by the buyer, excluding VAT.
Value of supply + VAT = Consideration
Consideration - VAT = Value of supply
The consideration for the supply can be monetary, non-monetary or a combination of both.
- If the total consideration is monetary, the value of supply will be the market value without the tax. It will include other expenses and charges that have been incurred by the supplier.
- If the total or a part of the consideration is not monetary, the value of supply will be calculated based on the monetary portion plus the fair market value of the non-monetary portion, excluding the VAT.
What factors reduce the value of supply?
The following factors can reduce the value of supply:
- Discounts and deductions given to the customer.
- Subsidies granted by other GCC states to the supplier.
Note: If the value of supply is expressed in a foreign currency, it will be converted into AED, or the currency of the relevant member state, based upon the current exchange rate.