FOC services as Deemed Supply
We are a consulting company providing audit and tax advisory services to clients in UAE. Sometimes, as part of entry strategy for winning a client, we offer certain services on a Free of Cost basis. Will this be considered as a deemed supply? If yes, how to calculate and charge VAT?
Replies
free services will attract deemed supply provisions. however if you can substantiate that the free service is provided as part of an agreement where you will provide other services, one can argue that the service is not really free but part of the entire agreement. in other words the cost of free service is built into the pricing of other services and. hence not. covered under deemed supply provisions .
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yes. FOC supply is considered as deemed supply but if it is proven as per the contract that additional benefits are provided along with main supply in the same price then it can be waived from being a part of deemed supply
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