- Definition of Single Composite Supply: In the UAE’s VAT framework, a “single composite supply” refers to a bundled offering of goods and/or services where multiple components are supplied together as part of a single transaction, with one component being principal and the others ancillary. For example, an international business-class flight ticket that includes lounge access is considered a single composite supply.
- Recent Clarifications by the FTA: New clarifications to Article 4(4) of the UAE VAT Executive Regulation specify that for a supply to qualify as a single composite supply, it must meet two criteria: all components must be provided by a single supplier, and the pricing for these components must not be separately identified. This ensures that even if a supply aligns with the general definition, it must satisfy explicit requirements to be classified as a single composite supply.
- Implications for Businesses: The distinction between a single composite supply and multiple supplies is influenced by how pricing is presented. If individual prices are specified for each component, the transaction cannot be classified as a single composite supply. Additionally, the VAT treatment of a supply lacking a principal component will be based on the overall nature of the supply. Businesses should seek professional advice when structuring these supplies to ensure compliance with VAT regulations.
Source Fintedu
