What is the date of supply for VAT purposes?

Article 26 - Date of Supply in Special Cases13 1. The date of supply of Goods or Services for any contract that includes periodic payments or consecutive invoices shall be the earliest of any of the following dates: a. The date of issuance of any Tax Invoice. b. The date payment is due as specified on the Tax Invoice. c. The date of receipt of payment. d. The date of expiration of one year from the date the Goods or Services were provided. 2. The date of supply, in cases where payment is made through vending machines, shall be the date on which funds are collected from the machine. 3. The date of Deemed Supply of Goods or Services shall be the date of their supply, disposal, change of usage or the date of deregistration, as the case may be. 4. The date of a supply of a Voucher shall be the date of issuance or supply thereafter. Chapter Two – Place of Supply

8. Date of supply The date of supply (also known as the ‘time of supply’ or a ‘tax point’) rules dictate the time when the liability to charge and account for VAT arises in respect of any supply of goods and services. The rules differ between a supply of goods and a supply of services. If a person supplies Goods… The date of supply is the earlier of the date of:      Services…      transfer, if goods are transferred under the supervision of the supplier; the recipient taking possession of the goods, if transfer is not under the supervision of the supplier; assembly or installation being completed (if applicable); import, where the goods arrive from outside the UAE; the recipient’s acceptance of the supply or a date no later than 12 months after the date on which the goods were transferred or placed at the client’s disposal if the supply was on a returnable basis; receipt of payment; or issue of a tax invoice. completion of the service; receipt of payment; or issue of a tax invoice. Example 11 ABC Co. sells goods to BCD Co. and the following events occur:  ABC Co. raises a tax invoice for the sale of the goods on 14 March;  ABC Co. delivers the goods to BCD Co’s premises on April;  BCD Co. pays for the goods on 2 April. The date of supply for the sale of the goods is 14 March as this is the earlier of the events which trigger the time of supply. ABC Co. must account for the VAT on the supply in the tax return that relates to the tax period that covers the month of March. 8.1.1. Special rules In addition to the standard date of supply rules, there are a number of rules which deal with specific situations. 29 VAT Guide | Taxable Person | VATG001

12. Construction industry 12.1. VAT liability of construction services Construction services which are supplied in the UAE are subject to VAT at 5%. This VAT treatment will apply regardless of the type of building which is being constructed. 12.2. Date of supply in the construction industry The normal date of supply rules apply to construction services in the same way as they apply to any other service i.e. the date of supply will generally be the earlier date of the following: • • • Receipt of payment; Completion of the services; or A tax invoice is issued in respect of the supply. However, in practice the construction industry involves supplies which take place over a significant period of time and are therefore subject to stage of completion payments/advance payments/retentions etc and other performance-related events during the course of the overall supply. As a result, applying the above date of supply rules may not always be straightforward for supplies within the construction industry and therefore special rules apply for the services which are supplied on a continuous or on-going basis over a period of time – these are often known as continuous supplies of services and apply to construction services where there are periodic payments or consecutive invoices. The rules for this are found in Article 26 of the Decree-Law. A supply is considered to fall under these rules where both factually and contractually there are multiple payments to be made under the contract – so for example, provisions for an advance payment and/or a stage of completion payment(s) and retentions would mean a supply was considered to fall under these rules. In such cases where a contract includes periodic payments or consecutive invoices, the date of supply shall be the earliest of the following: • • • The date of issuance of any tax invoice; The date payment is due as shown on the tax invoice; The date of receipt of payment. In the event that 12 months has passed from the date of provision of the goods or services and none of the above events has occurred, a date of supply will be triggered at the 12-month point. The certification of a construction project at a particular point in time will not trigger the date of supply for VAT purposes. However, certification of a project is often linked to other obligations such as a due date for payment, which may itself trigger the date of supply. 30 VAT Guide | Real Estate | VATGRE1