How to treat discounts under vat in uae

1. PARSH ACCOUNTING & BOOKKEEPING HOW TO TREAT DISCOUNTS UNDER VAT IN UAE

2. PRESENTATION FRAMEWORK Key talking points Knowing the basics VAT on discounted price in UAE How to treat VAT on discounted prices in UAE? Conditions of discounts under VAT in UAE About Parsh Accounting & Bookkeeping PARSH ACCOUNTING & BOOKKEEPING

3. KNOWINGTHE BASICS PARSH ACCOUNTING & BOOKKEEPING Businesses are confused about how to treat discounts under VAT in UAE. As per FTA, VAT will be calculated on discounted prices in UAE. Discount is often used as a sales strategy by businesses to attract their customers. A Discount is referred as a reduction in price.

4. VATON DISCOUNTED PRICEINUAE Businesses will provide discounts to their client for a range of reasons, however, the purpose here is ‘How the discounts treated in UAE VAT? For businesses, the observation of providing discounts isn't new, however, they're going to have the interest to understand, however, the observation of providing discounts is going to be treated within the UAE VAT regime? this is often one thing new that businesses got to perceive and consequently create the acceptable amendment, if any, considering the potential impact on their sales strategy.

5. HOWTO TREATVAT ON DISCOUNTED PRICESIN UAE? The most controversial question regarding discounts beneath VAT in UAE is whether or not VAT be charged on worth once considering the discount? Or on the total value of providing while not considering the discount? PARSH ACCOUNTING & BOOKKEEPING Federal Tax Authority (FTA) provides the rules on the way to treat discounts provided on the availability of products and services. The VAT is charged on the worth that is arrived once considering the discount. For example, the value of supply is AED 5,000 and discount is AED 1,000. In this case, the value of supply will be AED 4,000 which is arrived after considering the discount value. PARSH ACCOUNTING & BOOKKEEPING

6. PARSH ACCOUNTING & BOOKKEEPING The discount is allowed to be reduced from the worth of the offer providing the subsequent conditions that square measure government laws square measure met: prescribed in UAE VAT The client has benefited from the reduction in worth The provider funded the discount Conditionsof discounts underVATin UAE The higher than conditions square measure quite clear that the good thing about discount ought to be passed on to the client and a lot of significantly, the discount ought to be funded by the provider.

7. Let us understand with an example Alqada spare parts trading sells accessories worth AED 500,000 to Burhan Automobiles. They also provide a discount of 5% on the price, as part of the New Year scheme. Sr.No. Discription of goods Qty. Rate Amount 01 Auto Spare Parts 100 5000 5,00,000 Doscount ( 5 % ) 25,000 VAT @ 5 % 23,750 Total 100 4,98,750 PARSH ACCOUNTING & BOOKKEEPING In the invoice, Auto Spare parts value is 5,00,000 AED Discount of 5% i.e. 25,000 AED is deducted from the of value supply VAT is being charged on 4,75,000 AED (5,00,000 AED – 25,000 AED * 5% VAT)

8. From the above example, it is clear that the VAT will only be charged on value after discount. As a result, we foresee that the existing business practice of providing discounts will continue without any changes as long as you meet the discount conditions mentioned above. PARSH ACCOUNTING & BOOKKEEPING

9. AboutParsh Accounting & Bookkeeping Parsh Accpounting and Bookkeeping is providing best and hassle free VAT services in Dubai, UAE. Our tax experts have a wide range of experience in every type of business industries. Our professional VAT specialists will assist you in many ways to ensure complete VAT compliance of your company as per the Federal Tax Authority ’s rules and regulations. PARSH ACCOUNTING & BOOKKEEPING

10. CONTACTUS PARSH ACCOUNTING & BOOKKEEPING Mailing Address Office No. 2101-05, Floor 21, Binary Tower, Marasi Drive, Business Bay, Dubai, UAE Phone Number 971 568511542 E-mail Address parshsocial@gmail.com