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Dear All,
I am an accountant for a company in UAE. The VAT recently came in force at the start of 2018 and its still a work in progress. Since the majority of the VAT Laws are based on UK's VAT system hence I am posting here my question.
As company we refer our clients to certain businesses. Which in turn sale to those clients, and pay a percentage of the sale to us for the referral.
1. What they sell and for how much is between the client and the business. We at no point receive or handle the good neither negotiate any price between the two. Hence, in my view the situation is different from a general Agent & Principal one. As we are neither selling on behalf of the Principal nor negotiating any deal.
2. This is not a Direct Income of the company. Just an Other Income away from standard Operation of the company.
Now the business is demanding that we Issue a TAX INVOICE for the referral, my questions are;
a) Are we obliged to Calculate VAT on the Referral Income. Its of much concern since the 5% VAT is not to be added on top of Income rater Grossed down and we will pay the full VAT.
b) If the VAT is chargeable, wont that make double taxation on the same sale, for example;
Sale to Client 1000
VAT to Client 50
Referral 24
VAT 1
In effect from a single sale of 1000 the VAT Paid to Govt is 51 which is in excess of the 5% applicable law.
I will be much obliged for the response. Regards
I am an accountant for a company in UAE. The VAT recently came in force at the start of 2018 and its still a work in progress. Since the majority of the VAT Laws are based on UK's VAT system hence I am posting here my question.
As company we refer our clients to certain businesses. Which in turn sale to those clients, and pay a percentage of the sale to us for the referral.
1. What they sell and for how much is between the client and the business. We at no point receive or handle the good neither negotiate any price between the two. Hence, in my view the situation is different from a general Agent & Principal one. As we are neither selling on behalf of the Principal nor negotiating any deal.
2. This is not a Direct Income of the company. Just an Other Income away from standard Operation of the company.
Now the business is demanding that we Issue a TAX INVOICE for the referral, my questions are;
a) Are we obliged to Calculate VAT on the Referral Income. Its of much concern since the 5% VAT is not to be added on top of Income rater Grossed down and we will pay the full VAT.
b) If the VAT is chargeable, wont that make double taxation on the same sale, for example;
Sale to Client 1000
VAT to Client 50
Referral 24
VAT 1
In effect from a single sale of 1000 the VAT Paid to Govt is 51 which is in excess of the 5% applicable law.
I will be much obliged for the response. Regards