Continuous supply refers to the provision of goods or services on a regular basis in accordance with the contract. The supplier shall regularly issue invoices to it and receive payment before the completion of the contract. This usually applies to long-term contracts. This is also called progressive billing, because a series of invoices are prepared at different stages of the project to require payment as a percentage of the work done.

Continuous supply or contract supply time involving progressive billing will be the date of the tax invoice, the due date of payment or the earliest date of payment shown on the tax invoice.

Continuous replenishment or progressive billing

The earliest below

Tax invoice date

The payment due date shown on the tax invoice

Payment date

Note: Only applicable when regular payments or continuous invoices do not exceed one year from the date of providing such goods and services.

Let us use examples to understand the supply time under continuous supply or progressive billing.

Examples of supply time for continuous supply or progressive billing

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. It is expected to complete the installation at the manufacturing plant of Stamps Ltd.’s plant in Ajman within 8 months. The contract provides for periodic billing so that Max Ltd can issue invoices when the work is completed at different stages of the project and collect payments accordingly. The completion dates of the contracts at different stages are as follows:

start date

Complete time

The first stage (20%) the second stage (50%) the third stage (30%)

March 10, 2018 March 29, 2018 August 15, 2018 October 5, 2018

Considering the above example, we created different scenarios to understand the supply time for determining continuous supply or progressive billing.

plan 1

Note: In order to understand the supply time, in the following example, we consider the monthly and quarterly VAT refund period

Phase 1 completion date Invoice due date Date of receipt of payment Date of receipt of payment Time of supply

Return period

(The period during which VAT needs to be reported and paid)

March 29, 2018 April 15, 2018 April 30, 2018 May 10, 2018 April 15, 2018 2018 Monthly Quarter

April 18 to June 18, 2018

In the above case, the delivery time is April 15, 2018. The reason is that the earliest delivery time is:

Tax invoice date

The payment due date shown on the tax invoice

Payment date

In this case, the date of the tax invoice is earlier than the due payment date and the payment receipt date. Therefore, if the report is a quarterly return, you need to report and pay the output VAT for the quarter from April to June 18, and if it is a monthly report, you need to report the VAT on April 18.

Scenario 2

The completion date of the second stage The due date of the invoice The date of receipt of payment The date of receipt of payment Time of delivery Return period (period of reporting and payment of value added tax)

Remaining advance

August 15, 2018 August 25, 2018 September 30, 2018 June 25, 2018 October 5, 2018 June 25, 2018 2018 Monthly Quarter

June 18 to June 18, 2018

In the above case, the supply time is June 25, 2018 when the advance payment is received, and the remaining time is August 25, 2018. The reason is that the earliest service supply time is:

Service completion date

Billing date

Payment date

In this case, if the advance payment is received, the delivery time is June 2018. Therefore, if it is a quarterly tax refund, you need to pay VAT from April to June 2018; if it is a monthly tax refund , You need to pay VAT in June 2018. As for the remaining time, the delivery time is August 25, 2018. If it is a quarterly return, you need to pay the VAT quarterly on July September 18; if it is a monthly return, you need to pay the VAT in August 2018 .

in conclusion

For suppliers, it is important to note that not all contracts with longer durations can meet the continuous supply requirements. The eligible contract here should be a contract that includes periodic invoicing and payment receipts before the final supply is completed. In addition, the length of time for regular billing/payment and the delivery date shall not exceed 12 months. The dates discussed above play a vital role in accurately determining the timing of supply, avoiding fines or early tax payments that would affect the company’s cash flow.