Introduction of VAT Law in UAE:
As you must be aware, Federal Decree-Law No.(8) of 2017 on Value Added Tax ('VAT Law') has been issued by the UAE Government, which is intended to take effect from 1st January 2018 and will affect our business transactions.
Our Tax Registration No.:
We have already been registered with UAE Federal Tax Authority and have been issued Tax Registration umber (TRN 100322328400003).
Our supply is subject to VAT:
VAT Law stipulates that all supply of goods & services (except as listed under the law as Exempt or Zero rated) shall be charged at a standard rate of 5% from effective date.
Our supply of goods/ services is a taxable supply as per VAT regulations and would be standard rated for supplies within UAE and thus VAT@5% would be chargeable on advances received from you w.e.f. 1st January 2018 as well as our billings (net of advances received post 1st January 2018, if any).
The VAT amount paid to us, would not be an additional cost to you, as you may be able to claim the same as an Input VAT Credit subject to you being registered for tax as well as nature of your business activity & supplies. Such input credit hence may be netted off against the VAT collected on your taxable supplies or you may be able to claim tax refund too.
We would suggest you seek your own professional advice in respect of your recovery position as well as other VAT obligations ahead of the proposed introduction date of 01 January 2018.
Intimation of amendment to our agreement/ contract:
Contract Value/ Rate/ Fee as quoted in our contract/ service agreement/ supply agreement is exclusive of VAT and w.e.f. 1st January 2018, VAT on said rates will be levied separately at applicable rate of 5%.
All our past agreements / contracts entered into till date hereby stands amended to include chargeability of VAT to you at rates as applicable from time to time and w.e.f 1st January 2018, VAT shall be charged in addition to the rates stated and payable by you in accordance with agreed credit terms.
We shall be issuing valid Tax Invoice for any supplies and you may use said Tax Invoice to claim Input Credit or Refund of VAT paid on such supplies subject to your tax registration, business activities etc.
Update your info with us including Tax Registration Number:
In order for us to be VAT compliant as well as issue you a Tax Invoice which you can use for claiming Input Credit or Refunds, we would request you to update us with your name as per tax authority records, tax registration no. as well as emirate of registration by filling in & returning us enclosed sheet before 31/12/2017 along-with copy of your TRN certificate.