The important factor in VAT legislation that must be understood very well is the date of the supply of goods and services. Thus, the date of supply becomes a crucial factor for VAT legislation. The following chart describes the subject very well about tax points.The man who sent this news, the wireless operator, was alone with his instrument on the top of a lofty building. The people remaining in the city he estimated them at several hundred thousand had gone mad from fear and drink, and on all sides of him great fires were raging. He was a hero, that man who staid by his post an obscure.
Example:
I. Question: What will be the tax point if Sajith LLC supplies toys to Nihal LLC on the 15th of January whereas Nihal LLC pays on the 20th of January, the invoice for this business transaction was issued on 22nd January?
Answer: As the goods were received on 15th January, therefore, the tax point in this particular case would be 15th January.
II. Question: Spectrum LLC paid her supplier through a debit card and purchased the laptop through online services. Spectrum LLC purchased a laptop on 1st January. The supplier sent the laptop on 4th January whereas an invoice was issued on 6th January which showed that full payment has been made. What is the tax point in this case?
Answer: In the given circumstances the tax point is 1st January as the payment was made online to purchase a laptop.
Date of Supply of Goods and Services – Special Case:
There are some other special cases as well. We are going to discuss them in the following table to paint a clear picture of events in your minds.
Same Supply With More Than One Tax Point:
It is a very possible case in the world of everyday business that supply may have multiple tax points. Most commonly we have such a scenario when some deposit is paid upfront whereas the balance is paid upon the delivery of goods or services.
Example:
Some equipment was ordered by ABR interior LLC on 10th February after paying some upfront as advance payment of AED 3000 on the same day i-e; 10th February. The delivery of goods was made possible on 14th February while the invoice was issued to pay off the remaining balance on 20th February and the remaining amount was actually paid on 22nd February.
Here we have two different tax points’ i-e; 10th February for advance payment and 14th February for the balance as well.
