Learn about taxable supplies:
‘Supply of goods or services for a consideration by a person conducting business in the UAE, and does not include an exempt supply,’ is defined as taxable supply by the VAT legislation. Taxable supplies will either fall under standard rated or zero rated. If it is an exempt supply then the supply cannot be a taxable supply.
Supplies must meet the following conditions in order to be a taxable supply:
- There should be a supply of goods and services
Since some VAT rules apply differently to goods and services, it is necessary to establish whether a person is supplying goods or services.
The transfer of the ownership of any property or assets, or the transfer or granting of the right to use the property or assets as the owner, supply of water, energy or real estate will be treated as a supply of goods.
Anything other than supply of goods will be treated as supply of services.
- Supply has to be for consideration
Supplies must be made in return for consideration only then a taxable supply exists. Anything that is received or expected to be received for the supply of goods or services, whether in money or other forms of payment, includes consideration.
The supplier must carefully consider what it receives in return for any supply made, thus the supplier should not only consider any financial benefit being received but also on any goods or services that it may be receiving in exchange.
- Supply has to be by a person conducting business in the UAE
The final requirement for taxable supply is that the supply must be made by the person who is conducting business in UAE.
Business includes regular or ongoing activity and is conducted independently by a person. Since business is treated as an independent activity, the activities of the employees will not be treated as being in the course of business. As such, employees will not charge VAT in respect of their employment.
Thus for VAT purposes the place of supply must be in UAE and the businesses have to be conducted in the UAE. If you have any doubt about taxable supplies call us on 00971-4-331-2332
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