For the supply of goods involving installation or assembly by the supplier, the supply time shall be the earliest date among the date of completion of assembly or installation, the date of receipt and the date of tax invoice.
Delivery time when assembling or installing the goods
Assembly or installation
The earliest below
Date of completion of assembly or installation
Payment date
Tax invoice date
Suppliers who are engaged in suppliers that require assembly or installation need special attention when determining the completion date of assembly or installation. Here, the date when the supplier transports the goods to the customer site for assembly or installation is not the delivery time. Instead, the date of completion of assembly and installation services will be the delivery time of the transported goods.
Let us understand the delivery time during assembly or installation through examples.
Example of service provision time
Note: In order to understand the supply time, in the following example, we consider the monthly and quarterly VAT refund period (Jan-Mar’18).
Max Ltd is a construction company registered in Dubai, UAE, and has signed a contract with Stamps Ltd. to supply and install the manufacturing plant. The installation at the manufacturing plant of Stamps Ltd.’s plant in Ajman is expected to be completed within 3-4 months.
Considering the above examples, we have created different scenarios to understand how to determine the supply time during assembly or installation.
plan 1
Contract date Assembly date or installation date Invoice date Receipt date Payment service supply time and return period (period when reporting and payment of value-added tax are required)
January 1, 2018 March 25, 2018 April 5, 2018 April 10, 2018 March 25, 2018 2018 Monthly Quarter
March 18 January March 18
In the above case, the delivery time is March 25, 2018. The reason is that the earliest delivery time is:
Date of completion of assembly or installation
Billing date
Payment date
In this case, the date of assembly or installation is earlier than the date of the tax invoice and the date of payment. 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.
Scenario 2
Invoice date, service completion date, payment date, return time provided by the service, return 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.
Scheme 3
Contract date Assembly date or installation date Invoice date Receipt date Payment service supply time and return period (period when reporting and payment of value-added tax are required)
January 1, 2018 April 5, 2018 April 10, 2018 March 15, 2018 March 15, 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:
Service completion date
Billing date
Payment date
In this case, the service completion date must be earlier than the invoice date and payment receipt date.
in conclusion
Suppliers engaged in goods that require assembly or installation need to be extra careful when determining the completion date of assembly or installation. This is because the completion of assembly or installation is dynamic and will vary depending on the products provided, between customers and customers, and where the installation or assembly is performed. If the contract does not clearly provide the activities involved in assembly or installation, it is recommended to check the exact activities involved in assembly or installation in accordance with the contract or in accordance with normal trade practices. Any error in accurately determining the delivery time will weaken the company’s cash flow through fines or early payment of value-added tax.