7/16/2020 6:28:43 AM cpa club one year ago
For purchases received from Non-resident Suppliers for which the recipient of the supply (the Customer) is obligated to account for the Tax due via the Reverse Charge Mechanism, the transitional rules as set out in section four of this guideline should be used to determine the appropriate rate of Tax to account for on the supply received.
Example 1: Bank Co received legal advice from a UK law firm in the form of an assessment report which was provided on 30 June 2020. It received the associated invoice from the Supplier on 15 July 2020. As the actual date of supply was prior to the effective date of the revised rate, Bank Co was required to account for the VAT in its June Tax return (via the reverse charge mechanism) at a rate of 5% in line with the date of the actual supply of services.
Example 2: Wholesale Co received ongoing technical and management support from its parent company in the US throughout 2020. Charges against these services were made every two months, and the invoice for the period 1 June 2020 to 31 July 2020 was raised on 31 July 2020. Although the supplies were of a continuous nature, and the July 2020 invoice covered supplies both before and after the effective date of the revised rate, as Wholesale Co did not want the administrative burden of splitting the value of the invoice, it elected to account for Tax via the reverse charge on the full value of the supply at a rate of 15%.
It is important to note that exceptions to the application of transitional provisions for contracts concluded or invoices issued before 11 May 2020 do not apply to supplies from external Suppliers, whether for goods or services, to which the reverse charge mechanism applies, as those supplies do not meet the conditions for the application of exceptions to the application of transitional provisions
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