{"id":3603,"date":"2018-01-11T00:38:48","date_gmt":"2018-01-10T19:08:48","guid":{"rendered":"http:\/\/carajput.com\/blog\/?p=3603"},"modified":"2021-12-25T13:09:18","modified_gmt":"2021-12-25T07:39:18","slug":"dont-get-confuse-with-uae-vat-transitional-issues","status":"publish","type":"post","link":"https:\/\/carajput.com\/blog\/dont-get-confuse-with-uae-vat-transitional-issues\/","title":{"rendered":"Don\u2019t get confuse with uae vat &#8211; transitional issues"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_58 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Page Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69dbe8f29646b\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #000000;color:#000000\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #000000;color:#000000\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69dbe8f29646b\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/carajput.com\/blog\/dont-get-confuse-with-uae-vat-transitional-issues\/#DONT_GET_CONFUSED_WITH_UAE_VAT\" title=\"DON\u2019T GET CONFUSED WITH UAE VAT\">DON\u2019T GET CONFUSED WITH UAE VAT<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/carajput.com\/blog\/dont-get-confuse-with-uae-vat-transitional-issues\/#TREATMENT_OF_VAT_UNDER_TRANSITIONAL_RULE\" title=\"TREATMENT OF VAT UNDER TRANSITIONAL RULE\u00a0\">TREATMENT OF VAT UNDER TRANSITIONAL RULE\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/carajput.com\/blog\/dont-get-confuse-with-uae-vat-transitional-issues\/#Transitional_provisions_for_supply_of_goods_and_services\" title=\"Transitional provisions for supply of goods and services\">Transitional provisions for supply of goods and services<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/carajput.com\/blog\/dont-get-confuse-with-uae-vat-transitional-issues\/#-Supply_of_goodsservices_in_instalments_onafter_January_1_2018\" title=\"-Supply of goods\/services in instalments on\/after January 1, 2018\">-Supply of goods\/services in instalments on\/after January 1, 2018<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/carajput.com\/blog\/dont-get-confuse-with-uae-vat-transitional-issues\/#-Issuing_invoice_for_supply_of_goods_and_services\" title=\"-Issuing invoice for supply of goods and services\">-Issuing invoice for supply of goods and services<\/a><ul class='ez-toc-list-level-4'><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/carajput.com\/blog\/dont-get-confuse-with-uae-vat-transitional-issues\/#Transitional_provisions_for_contracts\" title=\"Transitional provisions for contracts\">Transitional provisions for contracts<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/carajput.com\/blog\/dont-get-confuse-with-uae-vat-transitional-issues\/#Industry-specific_scenarios\" title=\"Industry-specific scenarios\">Industry-specific scenarios<\/a><ul class='ez-toc-list-level-5'><li class='ez-toc-heading-level-5'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/carajput.com\/blog\/dont-get-confuse-with-uae-vat-transitional-issues\/#Trading_firms\" title=\"Trading firms\">Trading firms<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-5'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/carajput.com\/blog\/dont-get-confuse-with-uae-vat-transitional-issues\/#Businesses_dealing_with_call-off_stock\" title=\"Businesses dealing with call-off stock.\">Businesses dealing with call-off stock.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-5'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/carajput.com\/blog\/dont-get-confuse-with-uae-vat-transitional-issues\/#Real_estate\" title=\"Real estate\">Real estate<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/carajput.com\/blog\/dont-get-confuse-with-uae-vat-transitional-issues\/#Insurance_firms\" title=\"Insurance firms\">Insurance firms<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/carajput.com\/blog\/dont-get-confuse-with-uae-vat-transitional-issues\/#Reasons_for_the_Movement_of_Goods_under_the_GST\" title=\"Reasons for the Movement of Goods under the GST\">Reasons for the Movement of Goods under the GST<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<figure id=\"attachment_8806\" aria-describedby=\"caption-attachment-8806\" style=\"width: 475px\" class=\"wp-caption alignnone\"><a href=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2018\/01\/download.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\" wp-image-8806\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2018\/01\/download.jpg\" alt=\"www.carajput.com; VAT\" width=\"475\" height=\"250\" srcset=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2018\/01\/download.jpg 310w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2018\/01\/download-300x158.jpg 300w\" sizes=\"(max-width: 475px) 100vw, 475px\" \/><\/a><figcaption id=\"caption-attachment-8806\" class=\"wp-caption-text\">www.carajput.com; VAT<\/figcaption><\/figure>\n<h2><span class=\"ez-toc-section\" id=\"DONT_GET_CONFUSED_WITH_UAE_VAT\"><\/span>DON\u2019T GET CONFUSED WITH UAE VAT<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><a href=\"https:\/\/carajput.com\/services-vat.php\"><strong>Value Added Tax (VAT)<\/strong>\u00a0<\/a>is an indirect tax. It is a type of general consumption tax that is collected incrementally, based on the value-added, at each stage of production or distribution\/sales. It is usually implemented as a destination-based tax.<\/p>\n<p>UAE is among the first GCC member states to introduce VAT, with an effective date of 1 January 2018. VAT will be charged at the standard rate of 5%. There are certain supplies and services which will be subject to zero rates or under exempt categories.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"TREATMENT_OF_VAT_UNDER_TRANSITIONAL_RULE\"><\/span><strong><em><span style=\"text-decoration: underline;\">TREATMENT OF VAT UNDER TRANSITIONAL RULE<\/span><\/em><\/strong><strong><em><span style=\"text-decoration: underline;\">\u00a0<\/span><\/em><\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Transitional rules refer to those transactions which are going to overlap the two periods i.e. period before and after vat implementation. For example, the following scenarios are covered under the transitional rule:<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Transitional_provisions_for_supply_of_goods_and_services\"><\/span><strong><span style=\"text-decoration: underline;\">Transitional provisions for supply of goods and services<\/span><\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><strong>-Supply of goods and services on\/after January 1, 2018<\/strong><\/p>\n<p>If the <a href=\"https:\/\/carajput.com\/blog\/tag\/supply-of-goods\/amp\/\">supply of good<\/a>s\/services takes place on\/after January 1, 2018, but the payment for the supply had been completed before January 1, 2018, <a href=\"https:\/\/carajput.com\/services-vat.php\">VAT<\/a> is applicable on the supply. The supplier should collect and remit VAT for the transaction despite the payment being made before the VAT regime.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"-Supply_of_goodsservices_in_instalments_onafter_January_1_2018\"><\/span><b>-Supply of goods\/services in instalments on\/after January 1, 2018<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>If a supply is partially made before January 1, 2018, and the remaining part of the supply is to be made on\/after January 1, 2018, the portion of the supply made after the implementation of the VAT regime is taxable. The same is applicable on supply delivered in parts\/instalments. The parts\/instalments delivered before January 1, 2018, are not taxed, however, VAT is levied on the parts\/instalments supplied after January 1, 2018.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"-Issuing_invoice_for_supply_of_goods_and_services\"><\/span><strong>-Issuing invoice for supply of goods and services<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>If an invoice is issued on\/before January 1, 2018 for goods\/services to be supplied after January 1, 2018, the supplier should make sure<a href=\"https:\/\/carajput.com\/services-vat.php\"> VAT<\/a> is collected and paid for the supply. In this case, since the payment was already made, an additional invoice showing the tax charged on the transaction should be issued.<\/p>\n<h4><span class=\"ez-toc-section\" id=\"Transitional_provisions_for_contracts\"><\/span><strong><span style=\"text-decoration: underline;\">Transitional provisions for contracts<\/span><\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<ul>\n<li>If two businesses have a contract that concludes before January 1, 2018, and goods\/services are to be supplied on\/after January 1, 2018, the contract will be considered inclusive of VAT. This means the firm supplying goods\/services should levy VAT on the supply made on or after January 1, 2018.<\/li>\n<li>If the contract is silent on the treatment of VAT, the value of supply will be considered as Inclusive of tax.<\/li>\n<li>The contract states the treatment of VAT, the value of supply will be exclusive of tax and tax will be collected over and above the value.<\/li>\n<\/ul>\n<h4><span class=\"ez-toc-section\" id=\"Industry-specific_scenarios\"><\/span><strong>Industry-specific scenarios<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<h5><span class=\"ez-toc-section\" id=\"Trading_firms\"><\/span><strong>Trading firms<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h5>\n<p>Goods sold by trading companies before 01st January 2018, but delivered (includes transportation) or made available (when transportation is not included) after 31st December 2017.<\/p>\n<p><a href=\"https:\/\/carajput.com\/services-vat.php\">VAT<\/a> will be applicable over such supplies. VAT is applicable on the goods delivered to the recipient or made available (the supply is ready but hasn\u2019t been delivered to the recipient yet) on\/after January 1, 2018.<\/p>\n<h5><span class=\"ez-toc-section\" id=\"Businesses_dealing_with_call-off_stock\"><\/span><strong>Businesses dealing with call-off stock<\/strong>.<span class=\"ez-toc-section-end\"><\/span><\/h5>\n<p>When goods are delivered to a potential customer\u2019s premises or warehouses, the ownership still belongs to the supplier until the recipient claims the stock, is termed call-off stock. In this case, VAT is applicable on the goods sold or taken from the stock after January 1, 2018.<\/p>\n<p>For example, the trader supplies goods the potential customer\u2019s warehouse on February 2, 2017. Goods that are taken or sold from this supply on January 20, 2018. VAT will be applicable on such goods, and tax\u00a0invoice should be issued to record the sales transaction.<\/p>\n<h5><span class=\"ez-toc-section\" id=\"Real_estate\"><\/span><strong>Real estate<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h5>\n<p>Transitional rules refer to those transactions which are going to overlap the two periods i.e. period before and after vat implementation.<\/p>\n<p>In the case of the construction contracts running over the period of the commencement date, <a href=\"https:\/\/carajput.com\/services-vat.php\">VAT<\/a> is not applicable on the portion of supplies provided before 31st December 2018. For real estate contracts, VAT is applicable on supplies made on or after January 1, 2018.<\/p>\n<p>&nbsp;<\/p>\n<h4><span class=\"ez-toc-section\" id=\"Insurance_firms\"><\/span><strong>Insurance firms<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p>Insurance policies which are issued or renewed on or after 01st January 2018, will be subject to VAT.<\/p>\n<p>Insurance contracts which have <span style=\"color: #0000ff;\">payment<\/span> on an instalment basis, the due dates of the instalments which are getting due after 31st December 2017 will be subject to <a href=\"https:\/\/carajput.com\/services-vat.php\">VAT.<\/a><\/p>\n<p>Popular blog:<\/p>\n<h4><span class=\"ez-toc-section\" id=\"Reasons_for_the_Movement_of_Goods_under_the_GST\"><\/span><strong><a href=\"https:\/\/carajput.com\/blog\/reasons-for-the-movement-of-goods-under-the-gst\/\">Reasons for the Movement of Goods under the <\/a><span style=\"color: #0000ff;\"><a style=\"color: #0000ff;\" href=\"https:\/\/www.caindelhiindia.com\/blog\/application-of-gst-on-contribution-by-rwa-members\/\">GST<\/a><\/span><\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n","protected":false},"excerpt":{"rendered":"<p>DON\u2019T GET CONFUSED WITH UAE VAT Value Added Tax (VAT)\u00a0is an indirect tax. It is a type of general consumption tax that is collected incrementally, based on the value-added, at each stage of production or distribution\/sales. It is usually implemented as a destination-based tax. UAE is among the first GCC member states to introduce VAT, &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[172,4],"tags":[789,790,786,791,788,787,785,784,783],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/3603"}],"collection":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/comments?post=3603"}],"version-history":[{"count":5,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/3603\/revisions"}],"predecessor-version":[{"id":20455,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/3603\/revisions\/20455"}],"wp:attachment":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/media?parent=3603"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/categories?post=3603"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/tags?post=3603"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}