Make sure to communicate to your customers that VAT is chargeable or else you will not be able to recover VAT
VAT is coming into effect on January 1, 2018, with VAT registration being on full speed, the VAT is a charge borne by the final customer, the general rule of VAT law is that the supplier has to account for VAT. The closing price of the contract is inclusive of VAT even when the agreement does not specify the inclusion of VAT.
If your firm has entered into contracts which has a completion date after January 1st, 2018 and there is no inclusion of VAT application when the arrangements were finalized, then the firm has to bear the cost of the VAT.
The executive regulations for VAT registration has intermittent provisions that deal with contracts that overlap the implementation date of the VAT and have no mention of VAT in their contracts. These provisions provide some relief to the suppliers who have not taken VAT into their final calculations.
With the help of this relief, the supplier is entitled to charge VAT in addition to the final price, and if the customer is VAT registered, they can deduct input VAT or will be allowed to a VAT refund.
Importance of these provisions:
These provisions do not apply automatically even when you register for VAT in UAE. The businesses will be able to pass on the VAT liability if and only if there is communication to their customers by the 31st December,2017. If not communicated or lapse of communication will lead to the conclusion that there will be no benefit from these transitional provisions. The businesses will lose their right to charge VAT unless the customer agrees for a change in the price clause of the contract.
The communication of VAT inclusion from the supplier should comply with certain guidelines. VATxperts can assist you to draft their communication and help your business to benefit from these transitional provisions and reclaim the VAT for your services. If you are in need of professional service or assistance in drafting the communication, please contact the VATxperts team for all VAT related needs.
How can we help?
VATxperts deal in VAT Advisory, tax optimization, VAT implementation and training services in the UAE and throughout the GCC. Our team of highly qualified and senior tax advisors, finance experts, and tax accountants will ensure a timely and nominal VAT services for SMEs. Apart from the consultative and execution of VAT services, our teams are available after 1 January 2018 (the launch date) to execute VAT compliance and stay on board to help your growing business to abide by the rules of VAT in UAE before it becomes multifaceted.
Who are we?
VATxperts is part of IMC group, offering comprehensive VAT Advisory, tax optimization, implementation and training services in the U.A.E. Our team comprises of qualified tax advisors, finance experts, and tax accountants who ensure timely and cost-effective VAT services for SME’s and Corporates.
For more information about VAT in UAE or VAT registration in UAE reach our consultant at [email protected]
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