For the supply of services, the way to determine the time of supply is similar to the way to determine the time of supply of goods. The only change is that you do not need to consider the “date of transfer of goods”, but need to consider the occurrence of “service completion date” and other dates related to service provision, as shown in the following table:

Service supply date

service hours

The earliest below

Service Completion Date The date the service was completed.

Payment receipt date This means that you have received the payment date for taxable supplies, which also includes advance receipts.

The date of the tax invoice The date the tax invoice was issued. The last date for issuing an invoice is within 14 days from the date of supply.

The reason for the above changes is obvious, that is, services are different from commodities, and services are essentially intangible. However, from a larger perspective, these regulations are similar, which helps fill the gap between the supply of goods and services, and ensures that the principles for determining the timing of service supply are simpler.

Let us use examples to understand the service provision time considering different business scenarios.

Examples of service hours

Note: In order to understand the supply time, in the following example, we consider the monthly and quarterly value-added tax return period (March to 18th, 2018).

Situation-1

Invoice date, service completion date, receipt and payment date, service return date, period (period when reporting and payment of value-added tax are required)

March 20, 2018 April 5, 2018 April 10, 2018 March 20, 2018 2018 Monthly Quarter

March 18 January March 18

In the above case, the delivery date is March 20, 2018. The reason is that the earliest delivery time is:

1. Service completion date

2. Invoice date

3. Date of receipt

In this case, the invoice date is earlier than the service completion date and the payment date. Therefore, if the report is a quarterly tax refund, you need to report and pay the output value-added tax from January to March 2018, and if it is a monthly report, you need to report the value-added tax for March 2018.

Scene-2

Invoice date, service completion date, receipt and payment date, service return date, period (period when reporting and payment of value-added tax are required)

April 10, 2018 April 5, 2018 March 15, 2018 March 15, 2018 2018 Monthly Quarter

March 18 January March 18

In the above case, the supply time is March 15, 2018. The reason is that the earliest service supply time is:

Service completion date

Billing date

Payment date

In this case, the payment date is earlier than the invoice date and service completion date.

Scene-3

Invoice date, service completion date, receipt and payment date, service return date, period (period when reporting and payment of value-added tax are required)

April 5, 2018 March 25, 2018 April 15, 2018 March 25, 2018 2018 Monthly Quarter

March 18 January March 18

In the above cases, the time of provision is March 25, 2018. The reason is that the earliest service time is:

1. Service completion date

2. Invoice date

3. Date of receipt

In this case, the service completion date must be earlier than the invoice date and payment receipt date.

in conclusion

Taking into account the various facts related to the services provided, companies engaged in service supply need to be extra careful and cautious when determining the supply time. Special attention is needed when determining the service completion date. This is because services are essentially intangible, and the ways in which services are provided are different. Therefore, from a simple understanding, many steps or activities seem to be the completion of services. Therefore, it is recommended that companies check the delivery of each service or study the service contract to understand the last step that defines the completion of the service and determine the date of completion of the service accordingly. Wrongly determining the timing of service provision can affect the company’s cash flow, which may be due to early payment of value-added tax or imposing fines.

related articles:

1. How to determine the supply time of goods

2. Supply time in the UAE based on VAT continuous supply or progressive billing method

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