/** * The main template file * * This is the most generic template file in a WordPress theme * and one of the two required files for a theme (the other being style.css). * It is used to display a page when nothing more specific matches a query. * E.g., it puts together the home page when no home.php file exists. * * @link https://developer.wordpress.org/themes/basics/template-hierarchy/ * * @package WordPress * @subpackage Tally * @since 1.0.0 */ ?>
Supply of multiple goods or services or a combination of both in the same transaction is a common business scenario. While the reasons are many for bundling these goods or services as part of the same transaction, but from the point of the supplier, what is more important is to understand the implication of VAT on such supplies. This because, based on the nature of goods or services which are supplied in a single transaction, the UAE VAT law classifies them into two categories:
Based on the nature of supply, a transaction can be classified either as multiple supplies or single composite supplies. Both the type of supplies have different VAT treatment. In this article, we will discuss about multiple supplies.
Multiple supplies refer to the supply of more than one component of goods or services for a single price but are not bundled due to natural necessities. In other words, it is not necessary or essential that these goods or services always need to be supplied together and they can be supplied individually in the normal course of business.
In multiple supplies, different supplies made as part of the same transaction can be subject to different VAT rates. In such circumstances, where a single consideration was paid for multiple supplies that are subject to different VAT rates, the supplier must determine the value of each supply and levy VAT. This implies that goods and services supplied as part of the same transaction need to be identified individually, in order to determine the tax applicability on such supply – whether taxable or exempt, and accordingly VAT is to be charged.
Let us understand this with an example.
Mr James, a visitor from Australia, booked a hotel room in Dubai through online for AED 2,000. While booking the hotel room, Mr James also opted for extra service of being picked up by the hotel from the airport for AED 250. For the services provided, the hotel charges single price of 2,250 AED.
For a hotel to levy VAT, they need to arrive at whether it is multiple supplies or single composite supplies? For that, first, they need to identify the different type of supplies made available in the same transaction and determine whether it is essential that they always need to be supplied together.
Considering the above example, hotel accommodation and transportation services are not essentially required to be supplied together and they are clearly independent of each other. Hence, the hotel accommodation and the transportation service are two different supplies for VAT purposes and are considered as multiple supplies.
As a result, the hotel charges VAT on the hotel accommodation at 5% and treats the airport pick-up service as an exempt local transportation service. As a result, VAT is levied only on hotel accommodation services i.e. 5% on AED 2,000.
The key point for the supplier making multiple supplies in a single transaction is to determine the value of each supply and accordingly charge VAT, if applicable. To know what is single composite supply and the VAT treatment on single composite supplies, please read 'Single Composite Supply in UAE VAT'.
Read more about UAE VAT
UAE VAT Return, VAT in UAE, How Does VAT System Works, Frequently Used Terms in VAT, VAT Exempt Supplies in UAE, VAT Return Form 201, Tax Audit under VAT in UAE, Supply under UAE VAT, Supply of Goods and Services in UAE VAT, Input Tax Recovery under VAT in UAE, VAT Return Filing in UAE, VAT Return Filing Period in UAE, Tax Agent under UAE VAT
VAT Rate
VAT Rate in UAE, VAT Rates Applicable to Education Sector in UAE, Difference between Zero Rate, Exempt and Out of Scope Supplies in UAE VAT, UAE VAT Rates- Handbook, Standard Rated Purchases/Expenses in VAT Form 201, How to Furnish Standard Rated Supplies in VAT Return Form 201, Zero-Rated and Exempt Supplies in VAT Form 201, Zero-Rated Supplies in UAE VAT
VAT Invoice
VAT Invoice in UAE, Simplified Tax Invoice under VAT in UAE, What Consumers Must Check in a Tax Invoice in UAE, Checklist for a Tax Invoice under VAT in UAE, Date of Supply, Value of Supply and Invoice for Deemed Supply in VAT, How to issue a Tax Invoice to unregistered customers, How to issue Tax Invoice to registered customers, Tax Invoice under VAT in UAE
The 2nd Phase- Integration phase of e-invoicing in Saudi Arabia
FAQ on 2nd phase of e-invoicing
Global Tax Guide For Business in Oman
e-invoicing Phase 2 Waves in Saudi Arabia
FAQs on Corporate Tax in UAE
How VAT-ready Software Helps Small Businesses to Grow in UAE