Federal Tax Authority Clarifies the Criteria for the date of supply for VAT

Abu Dhabi, January 12, 2019 The Federal Tax Authority (FTA) has confirmed that the date of supply for Value Added Tax (VAT) with regard to Independent Directors services is determined either in accordance with the general rules or the special rules, depending largely on whether the fees for the said directors were known from the outset or not.

Where such fees are known from the outset, the date of supply shall be determined in accordance with the provisions of Articles (25) and (26) of Federal Decree-Law No. (8) of 2017 on VAT, depending on whether or not there will be periodic payments. If such fees are not known from the outset, they shall be determined upon conclusion of the Annual General Meeting and the date of supply shall be established only when such fees become known.

The date of supply prescribes the point in time when a VAT Registrant needs to account for VAT, the Authority explained in the Public Clarification on the Date of Supply for Independent Directors. This is part of the Public Clarifications service available on the FTAs website to introduce taxpayers to all aspects of the tax system and facilitate compliance. The service can be accessed via the link: https://www.tax.gov.ae/public-clarification.aspx

The FTA explained that in instances where the Board Fees are known at the outset and involve periodic or multiple payments, the date of supply would be determined as per Article (26) of Federal Decree-Law No. (8) of 2017 on VAT, where the date of supply would be the earliest of the following three: The date of issuance of the tax invoice; the date the payment is due as shown on the tax invoice; and the date of receipt of payment. If 12 months have passed from the date of provision of services and none of the aforesaid events has occurred, the date of supply will be triggered at the end of the 12th month.

As for the occasions where Board Fees are known at the outset but with no periodic or multiple payments, the date of supply would be determined as per Article (25) of the Federal Decree-Law No. (8) of 2017 on VAT. Accordingly, the date of supply would be the earliest of the following three: The date of issuance of a tax invoice; the date on which the provision of services was completed; and the date of receipt of payment.