Goods and Services Tax DON'T GET CONFUSE WITH UAE VAT TRANSITIONAL ISSUES

DON'T GET CONFUSE WITH UAE VAT TRANSITIONAL ISSUES

DON'T GET CONFUSE WITH UAE VAT  TRANSITIONAL ISSUES

Value Added Tax (VAT) 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.

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.

TREATMENT OF VAT UNDER TRANSITIONAL RULE 

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:

Transitional provisions for the supply of goods and services

-Supply of goods and services on/after January 1, 2018

If the supply of goods/services takes place on/after January 1, 2018, but the payment for the supply had been completed before January 1, 2018, VAT is applicable on the supply. The supplier should collect and remit VAT for the transaction despite the payment being made before the VAT regime.

-Supply of goods/services in installments on/after January 1, 2018

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/installments. The parts/installments delivered before January 1, 2018, are not taxed, however, VAT is levied on the parts/installments supplied after January 1, 2018.

-Issuing invoice for supply of goods and services

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 VAT 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.

Transitional provisions for contracts

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.

  • If the contract is silent on the treatment of VAT, the value of supply will be considered as Inclusive of tax.
  • If 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.

Industry-specific scenarios

TRADING FIRMS

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. VAT 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’t been delivered to the recipient yet) on/after January 1, 2018.

BUSINESSES DEALING WITH CALL-OFF STOCK.

When goods are delivered to a potential customer’s premises or warehouses, the ownership still belongs to the supplier until the recipient claims the stock, which is termed call-off stock. In this case, VAT is applicable on the goods sold or taken from the stock after January 1, 2018.

For example, the trader supplies goods to the potential customer’s warehouse on February 2, 2017. Goods that are taken or sold from this supply on January 20, 2018. VAT will be applicable to such goods, and a tax invoice should be issued to record the sales transaction.

REAL ESTATE

Transitional rules refer to those transactions which are going to overlap the two periods i.e. period before and after vat implementation.

In the case of the construction contracts running over the period of the commencement date, VAT is not applicable to the portion of supplies provided before 31st December 2018. For real estate contracts, VAT is applicable to supplies made on or after January 1, 2018.

INSURANCE FIRMS

Insurance policies that are issued or renewed on or after 01st January 2018, will be subject to VAT.

For insurance contracts that have payment on an installment basis, the due dates of the installments which are getting due after 31st December 2017 will be subject to VAT.

Rajput Jain and Associates 

Disclaimer: The content of this post isn't considered to be professional or legal advice, We aren't responsible for any damages arising from your access to the location content & must not be relied on or used as a substitute for legal advice from a lawyer professional in your jurisdiction. CARajput is among India's big digital compliance services platform which committed to helping people have started & developed their businesses. We had started with the goal of creating it easier for start-ups to start out their business. Our main aim is to assist the businessman with applicable laws & regulations compliance and providing support at each & every level to make sure the business stays compliant and growing continuously. For any query, help or feedback you may in touch on singh@carajput.com or Call or what’s-up on 9-555-555-480

Share This Post

Related Articles

Related Videos


Types of GST Returns: What is GST Return? | All GST Returns | Types of GST Returns and Due Dates

Types of GST Returns: What is GST Return? | All GST Returns | Types of GST Returns and Due Dates

 

Published On: Nov 09, 2021 | By: RJA


E-Invoicing Under GST? | E-INVOICING ? | All About GST E-Invoice

E-Invoicing Under GST? | E-INVOICING? | All About GST E-Invoice

Published On: Nov 12, 2021 | By: RJA

Need help?

Request a call
from a RJA
Business Advisor.

LET'S TALK

Private Limited Company

Popular Categories

Browse Blogs

Recent Posts

All about the Equity Linked Savings Scheme & its Returns

All about the Equity Linked Savings Scheme & its Returns

New Functionality of the interest calculator in GSTR-3B

New Functionality of the interest calculator in GSTR-3B

How to respond notices for AIS (Annual Information Statement) mismatch?

How to respond notices for AIS (Annual Information Statement) mismatch?

Payment of TDS via using Form 26QB on sale of property

Payment of TDS via using Form 26QB on sale of property

RBI intends to tokenisation assets, bonds as part of the wholesale CBDC pilot.

RBI intends to tokenisation assets, bonds as part of the wholesale CBDC pilot.

Connect with a RJA Advisor

Fields marked with an * are required

Enquire Us

Please send us your query and we feel very happy helping you

Testimonials

  • Thank you very much for all your help in setting up my new company and clearing up all outstanding business in my sole trader accounts. For the first time in years I have peace of mind regards my business accounts. Your workforce are a credit to you, the girls at reception are so helpful and Chris has been brilliant. It is very much appreciated.

    A US consultancy group

  • Rajput Jain & Associates. are a tremendous value added to me as an executive and a busy parent. It just makes sense to delegate my tax file to them -- they are proactive, extremely service oriented, and most importantly, I am completely confident they are finding every dollar of tax savings available to me.

    A Leading Service Provider

  • We use Rajput Jain & Associates for all our accounting, Corporation tax, VAT and other compliance needs. The service is professional, courteous and prompt. I would recommend Rajput Jain & Associates to any company requiring a comprehensive accounting and tax service.

    A Leading Consultancy Firm in Dubai

Money Back Guarantee

Not happy with the service? You can request a refund at anytime within 30 days!

24/7 Support

Get support through phone, email, mobile app or live chat - 24/7, 365 days.

EMI Payment

Easily pay online with EMI payments, credit or debit card, net banking, PayPal and more.

Get In Touch--

Rajput Jain & Associates

Add: P-60, Connaught Circus, Connaught Place, New Delhi-110001

Email: singh@carajput.com

Phone: 9555555480

Legal Disclaimer--

The information contained on this website merely provides details of our firm to persons who have shown interest in knowing more about us and is not intended to solicit work or advertise our capabilities in any manner. The information provided on this website is general in nature and should not be used as a basis of decision-making without further professional advice. The third party site links are only provided for ready reference of the users and CA Rajput Jain & Associates neither controls their content nor undertakes any responsibility regarding them.

© 2016 Rajput Jain & Associates. All Rights Reserved | Sitemap

Call Email