Scribd Logo
Upload

Welcome to Scribd!

  • 45 views

    UAE VAT Treatment For Wastage & Shrinkage

    Uploaded by

    kashif1905
    The document discusses the impact of indirect taxes on the retail sector in the UAE. It addresses how wastage and shrinkage in inventory should not be subject to VAT since there is no underlying supply. It also examines the recoverability of input VAT for damaged or lost goods during transportation. Input VAT can be recovered if the retailer intended to use the goods for taxable supply but lost them due to normal business operations or unforeseen events beyond their control. Compensation payments from suppliers for damaged goods also require analysis of contractual terms to determine tax treatment.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    UAE VAT Treatment For Wastage & Shrinkage

    Uploaded by

    kashif1905
    45 views1 page
    The document discusses the impact of indirect taxes on the retail sector in the UAE. It addresses how wastage and shrinkage in inventory should not be subject to VAT since there is no underlying supply. It also examines the recoverability of input VAT for damaged or lost goods during transportation. Input VAT can be recovered if the retailer intended to use the goods for taxable supply but lost them due to normal business operations or unforeseen events beyond their control. Compensation payments from suppliers for damaged goods also require analysis of contractual terms to determine tax treatment.

    Original Description:

    UAE VAT Implication and treatment for Wastages and Shrinkages

    Original Title

    UAE VAT Treatment for Wastage & Shrinkage

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The document discusses the impact of indirect taxes on the retail sector in the UAE. It addresses how wastage and shrinkage in inventory should not be subject to VAT since there is no underlying supply. It also examines the recoverability of input VAT for damaged or lost goods during transportation. Input VAT can be recovered if the retailer intended to use the goods for taxable supply but lost them due to normal business operations or unforeseen events beyond their control. Compensation payments from suppliers for damaged goods also require analysis of contractual terms to determine tax treatment.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    45 views1 page

    UAE VAT Treatment For Wastage & Shrinkage

    Uploaded by

    kashif1905
    The document discusses the impact of indirect taxes on the retail sector in the UAE. It addresses how wastage and shrinkage in inventory should not be subject to VAT since there is no underlying supply. It also examines the recoverability of input VAT for damaged or lost goods during transportation. Input VAT can be recovered if the retailer intended to use the goods for taxable supply but lost them due to normal business operations or unforeseen events beyond their control. Compensation payments from suppliers for damaged goods also require analysis of contractual terms to determine tax treatment.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 1

    IMPACT OF INDIRECT TAXES ON

    RETAIL SECTOR IN UAE 15

    Wastage, Shrinkage
    (part of COGS / Other Revenue)

    Waste Shrinkage

    • Stock identified as damaged/ • Difference in recorded and


    not suitable for sale during actual inventory on a
    daily stock-take by store periodical basis
    • i.e., Theoretical stock –
    physical stock

    Expired Damaged Import Others


    Stock with Items impaired Products that Products eaten/
    expired shelf-life due to poor have arrived stolen by staff or
    storage damaged customers

    Stock adjustments due to wastage or shrinkage that the retailer intended to use the goods for
    are merely accounting write-offs and the making a taxable supply; however lost the goods
    damaged stock, if any, is disregarded under the either in the normal course of business or due to
    closed environment and thus, there is no supply unforeseen event/event beyond his control and
    done by the retailer in relation to damaged thus, the input VAT is recoverable in relation to
    goods. Thus, a view can be taken that the write- such damaged or lost goods.
    offs on account of wastage and shrinkages should
    not be subject to VAT in absence of underlying Furthermore, if the retailer gets compensated for
    supply and consideration for the same. the damaged or lost goods by the main supplier;
    it would be relevant to analyse the corresponding
    contractual terms to determine the taxability of
    Damaged or Lost Goods the transaction. While the payments which are
    In addition to such shrinkages/accounting compensatory in nature (i.e. made to make the
    write-offs, the retailers also face damage/loss loss good without any underlying supply as per
    of inventory during the transportation and the agreed contractual terms) should be outside VAT
    concern arises around the input VAT recovery in scope as per the public clarification issued by
    relation to such damaged/lost goods. FTA on ‘Compensation based Payments’; the
    scenario would need to be evaluated on case to
    As per the UAE VAT Law input VAT is recoverable case basis to understand overall arrangements,
    if the input supply is used or intended to be which person is making the payment towards
    used for making taxable suppliers. In case of loss and whether there are any agreed terms/
    damaged/lost goods; a view can be taken contracts.

    You might also like