Sometimes companies that provide goods or services, because of their business strategy, provide two or more goods or services in one transaction, or provide a combination of goods and services. They are provided together as a sales strategy to attract more customers, or the nature or type of goods or services requires them to be bundled or provided together.

In the UAE VAT, the supply of more than one component in a single transaction is called multiple supplies and a single composite supply. Depending on the nature of the supply, the supply can be multiple supplies or a single composite supply.

To understand what multiple supplies are, please read “Multiple Supplies in UAE VAT”.

A single integrated supply broadly refers to the supply of goods or services that include two or more natural bundles and supplies, or the supply of a combination of goods and services. The UAE VAT Implementation Regulations clearly stipulates the supplies and applicable conditions that should be regarded as a single composite supply.

Example of a single composite supply

According to the UAE’s VAT Regulations, a single composite supply includes the following:

1. One of the components is the main component.

2. All other components in the supply are necessary or indispensable for the manufacture of the supply, including elements that usually accompany the supply.

(3) All these components (except the subject) are not an important part of the supply or do not constitute a goal in themselves, but a means to better enjoy the subject’s supply.

This means that goods and services are bundled together due to natural needs. The elements in the integrated supply of goods and services depend on the elements in the “main elements”. Although the law does not define the main component, it usually refers to the main element that forms part of the composite supply, and any other subordinate supply that forms part of the composite supply is the secondary element of the secondary supply.

Similarly, a supply that has two or more elements closely linked to form a single supply that is impossible or unnaturally split can also be regarded as a single composite supply.

Conditions of single composite material supply

A supply is considered a single composite supply only if all of the following conditions are met:

1. The supplier does not separately identify or charge prices for different components of the supply.

2. All the supplied components are provided by one supplier.

Example of a single composite power supply

The airline provides free lounge access for all business class passengers on international flights. Since the access to the lounge is a condition attached to the supply of international flights, these two components will be treated as a single composite supply, subject to 0% value-added tax.

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