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Transition to VAT

Transition to VAT

Filing VAT return under the VAT regime is crucial as non-compliance and delay will result in penalties and affect your compliance rating and timely refunds.

Will there be any transitional rules ?

Special rules will be provided to deal with various situations that may arise in respect of supplies that span the introduction of VAT. For example:

  • Where a payment is received in respect of a supply of goods before the introduction of VAT but the goods are actually delivered after the introduction of VAT, this means that VAT will have to be charged on such supplies. Likewise, special rules will apply with regards to supplies of services spanning the introduction of VAT.
  • Where a contract is concluded prior to the introduction of VAT in respect of a supply which is wholly or partly made after the introduction of VAT, and the contract does not contain clauses relating to the VAT treatment of the supply, then consideration for the supply will be treated as inclusive of VAT. There will, however, be special provisions to allow suppliers to charge VAT in situations where their recipient is able to recover their VAT but where there is no VAT clause
How to determine the place of supply for which invoice is issued and consideration is paid prior to registration ?

If the invoice is issued and consideration is paid prior to registration date and supply is made after registration then the authority ignores date of supply or date of payment and considers tax due date as date of supply

Whether the tax is required to be paid for continuous supplies performed prior to the VAT regime ?

With respect to continuous supplies which were partially performed before the VAT regime or before the registration date and partially in VAT regime, then the tax shall not be due on the part performed before the VAT regime.

What are the situations in which VAT needs to be paid for which invoice is issued and consideration is paid prior to registration ?

If the supplier receives the consideration or part thereof or issues an invoice for goods or services prior to VAT, the date of supply shall be same as the effective date of VAT in the following instances if they occur after the effective date of VAT:

  • Transfer of goods under the supervision of supplier
  • Placing of goods at the recipient’s disposal
  • Completion of assembly or installation of goods
  • The issuance of customs declaration
  • The acceptance by recipient of goods of the supply

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