SUPPLY OF GOODS FROM DZ TO MAINLAND ON DDP TERMS
Hi
i have following query, would appreciate guidence from experts:
Since we are located in RAK FREEZONE (DZ) and we have several customers in UAE Mainland, when we supply goods we need to pass RAK Customs and none of our customer is registered with RAK Customs hence our Importer code is utilized for goods clearance.
Now due to this process all our sales transactions to mainland, imports get auto populated in our TRN box 6 “goods imported into the UAE” .
Previously per advice of our VAT consultants while submitting our returns we adjust such amounts in box 7 “adjustment to goods imported into the UAE”, considering these are not our imports and reflecting to our TRN only, since our importer code is used. At the same time we issue VAT RCM statements to customers informing them to do same treatment in their returns
is this correct?
our terms to customers are DDP basis should we issue TAX invoice adding 5% VAT or treat these adjustments in box 10 “Supplies subject to reverse charge provisions” and not in box 7.
Thanks
Replies
If your sale term is DDP basis then such supplies should be charged VAT @ 5% as the sale gets completed when the goods are in mainland (transfer of title/ownership of the goods). So the current practice of adjusting populated imports in Box 7 is incorrect. As you are selling on DDP basis it is incorrect to state that "considering these are not our imports and reflecting to our TRN only, since our importer code is used". As per sale term the goods belong to your company itself until the time these are Customs cleared and brought into mainland for transferring the ownership of the goods to your customer.
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