The tax which has been levied and needs to be assessed, will require a specific date to be established for the transaction for taxpayer and tax administration to carry out the quantification. This article provides for the manner of determining the 'Date of Supply'.
The Date of supply shall not be entirely left at the discretion of the taxable person. Taxable persons first need to look into which clause of this article is applicable for a supply and then ascertain the date so stated under that clause.
Article 25 of Decree Law: Tax shall be calculated on the date of supply of Goods or Services, which shall be earlier of any of the following dates:
A more brief view of the above discussion can be depicted below:
Description |
Applicability |
Date of Supply |
Transfer supervised by supplier |
Goods |
Transfer of lawful possession of Goods |
Transfer without supervision by Supplier |
Goods |
Collection with lawful possession of Goods |
Assembly and installation |
Goods |
Completion of assembly or Installation |
Import under customs legislation |
Goods |
Date of Import as per customs Legislation |
Delivery towards 'sale on approval |
Goods |
Acceptance or 12 months from date of transfer of goods or its placement at disposal of recipient |
Provision of services |
Services |
Completion of service |
Receipt of payment/issuance of tax invoice |
Both Goods and Services |
Whichever is Earlier |
Date of Supply in case of Continuous supply of Services
The date of supply of Goods or Services for any contract that includes periodic payments or consecutive invoices is the earliest of any of the following dates, provided that it does not exceed one year from the date of the provision of such Goods and Services:
(a) The date of issuance of any Tax Invoice.
(b) The date on which payment is due as shown on the Tax Invoice.
(c) The date of receipt of payment.
Article 26 – Date of Supply in Special Cases
Place of Supply
Place of supply is most important because it is the determination of the place of supply that provides the information as to which state is entitled to collect the tax in respect of the taxable supply effected by the taxable person on the date of supply.
When a transaction is referred to as 'supply made', it can refer to the location of the supplier at the time of affecting the outward supply or refer to the location of the goods at the time of affecting the supply.
Place of supply is important to know whether tax is payable in UAE or not. If place of supply is within UAE then VAT is applicable on those supplies and the taxable person shall be liable to discharge VAT as prescribed. This article puts the places of supply in three categories, namely:
Determining Place of Supply for Goods:
Of all the important aspects to be determined, place of supply is most important because it is the determination of the place of supply that provides the information as to which state is entitled to collect the tax in respect of the taxable supply effected by the taxable person on the date of supply.
1. The place of supply of Goods shall be in the UAE if the supply was made in the UAE, and does not include Export from or Import into the UAE.
2. The place of supply of installed or assembled Goods if exported from or imported into the State shall be:
3. The place of supply of Goods that includes Export or Import shall be as follows:
a. Inside the State in the following instances:
b. Outside the State in the following instances:
4. Goods shall not be treated as exported outside the State and then re-imported if such Goods are supplied in the State and this supply required that the Goods exit and then re-enter the State according to the instances specified in the Executive Regulation of this Decree-Law.
The whole discussion about the place of supply in each of the three categories identified above, has been summarised in the table below for ease of understanding.
Place of Supply of Goods 'in UAE'
Transaction |
Origin
|
Destination
|
Recipient |
Additional Facts of Recipient |
Place of Supply |
Supply |
UAE |
UAE |
Any |
Registered or unregistered in UAE |
UAE |
Assembly |
UAE |
UAE |
Any |
Registered or unregistered in UAE |
UAE |
Supply |
UAE |
RoW |
Any |
- |
UAE |
Supply |
UAE |
GCC |
In GCC |
|
UAE |
Supply |
UAE |
UAE |
UAE |
|
UAE |
Where place of supply is 'in UAE' the supply will be liable to VAT notwithstanding the destination of journey of the goods.
Place of Supply of Goods 'Outside UAE'
Transaction |
Origin
|
Destination
|
Recipient |
Additional Facts of Recipient |
Place of Supply |
Supply |
Outside UAE |
Outside UAE |
Any |
- |
Outside UAE |
Assembly |
Outside UAE |
Outside UAE |
Any |
- |
Outside UAE |
Supply |
UAE |
Within GCC |
In GCC |
Registered in GCC |
Outside UAE |
Supply |
UAE |
Within GCC |
In GCC |
|
Outside UAE |
Supply |
GCC |
UAE |
UAE |
|
Outside UAE |
Where place of supply is 'outside UAE' the supply will not be liable to VAT as it would be an export as per article 45 and kindly refer to Chapter V for detailed discussion on export.
Determining Place of Supply for Water and Energy:
Supply of water and energy (specified forms) does not follow the general principles of place of supply in view of the significance of economic activity involving water and energy.
The place of supply in case of supply of Water and Energy can be determined from the below table:
Description |
Supply By |
Supply To |
Place of Supply |
Effective Place of Supply |
|
Water and Energy |
Taxable Person |
Taxable Person |
Place of Residence of Taxable Trader |
Within UAE |
UAE |
Within GCC |
Outside UAE |
||||
Taxable Person |
Non-Taxable Person |
Actual Consumption |
Within UAE |
UAE |
|
Outside UAE |
Outside UAE |
Determining Place of Supply for Services:
Place of supply of services will be the place of residence of supplier of Services.
The place of residence of supplier of service shall be:
Article 30- Determining Place of Supply for certain Special Cases:
Article 30: As an exception to what is stipulated in Article (29) of this Decree-Law, the place of supply in special cases shall be as follows:
Article 31- Determining Place of Supply for Telecommunication and Electronic Services:
For telecommunications and electronic Services specified in the Executive Regulation of the Decree-Law, the place of supply shall be:
The actual use and enjoyment of all telecommunications and electronic Services shall be where these Services were used regardless of the place of contract or payment.
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About Author
Author of this article is CA Deepak Bharti who is member of ICAI. He can be reached at cadeepakbharti@yahoo.com. Suggestions/comments are most welcome.
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