Date of Supply for Independent Directors
The Federal Tax Authority (“FTA”) has recently announced additional public clarifications on the date of supply for independent directors. Although the FTA has already issued a Director’s Services VAT Guide in March 2018, the date of supply of director services was a grey area for registrants. This additional clarification provides different scenarios based on the board fees paid and the date of supply for each of them:
Scenario 1. Board fees are known after the conclusion of Annual General Meeting (“AGM”)
As per the FTA clarifications, the date of supply, in this case, shall be the date when board fees are known after the conclusion of the AGM. Disregard the date on which the provision of services was completed physically. Therefore, the registered director shall account for VAT and issue a tax invoice within 14 days from the date board fees are known following the conclusion of the AGM.
Scenario 2. Board fees are known at the outset and involve periodic payments or multiple payments
In the second scenario, the date of supply shall be earliest of the following:
- Date of issuance of a tax invoice;
- Due date of payment;
- Date payment was received.
Scenario 3. Board fees are known at the outset, however, there are no periodic payment or multiple payments involved
If the third scenario is relevant, then the registered director shall determine the date of supply as the earliest of the following:
- Date of issuance of a tax invoice;
- Date on which the provision of services was completed;
- Date payment was received.
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