Urgent: Contact Your Customers by 31st December 2017

If you do not communicate with your customers in time VAT may be a cost to you that cannot be recovered

VAT will be imposed in the UAE from 1st January 2018.A�Although VAT should be paid by the final consumer, the general rule under the VAT law is that the supplier will be required to account for VAT, and the contract price will be inclusive of VAT where the contract does not contain a clause on VAT.

If your business has entered into contracts which will continue beyond 1st January 2018, but you did not deal with the application of VAT at the time these contracts were concluded, generally you are required to bear the cost of VAT.

Transitional Provisions

The executive regulations contain transitional provisions dealing with contracts that straddle the implementation date of 1st January 2018 but do not mention VAT.A� These transitional provisions provide some protection to suppliers who may not have taken VAT into account in concluding their existing contracts.

Under these provisions, the supplier can charge customers VAT in addition to the contract price if the customers are registered for VAT and can deduct input VAT or are entitled to a VAT refund.

Why is this Important?

These transitional provisions will not operate automatically.

You will only be able to pass on the VAT liability to your customers if you communicate with them by 31st December 2017.A� Failure to communicate with them by this date will mean that you will not be able to benefit from these transitional provisions and will lose the right to charge your customers VAT unless your customers agree to an amendment of the contract.

How can I help?

Your communication with customers must comply with certain requirements, so let me know and I can steer you in the right direction.

If you own/run a business in the UAE, please act on this nowa��a��a��.

 

GREG POGONOWSKI

www.yourmoney-matters.net

email: greg@yourmoney-matters.com