Post-dated cheques are usually payment received before the completion of supply. The issue arises on receipt of post-dated cheque or PDC is do they qualify as an advance receipt? Will receipt of post-dated cheque fall under the definition of date of supply for the purpose of advance?
As per the Article 25 of the Decree-Law on UAE VAT read along with Article 19 on due tax at the date of supply of the Executive regulation on UAE VAT, Date of supply is the earliest of:
- Date of receipt of payment (only to the extent received in case of advance receipt)
- Date of transfer of goods or provision of services
- Date of issue of invoice
Receipt of payment in general accounting terms means the date of credit to the bank account. Even for the purpose of recording a receipt transaction, amount cleared and received in the bank account is recognized as payment. Post-dated cheques issued are not recognized on the date of receipt of the cheque in the books. They are recognized on the date mentioned on the cheque or on the date on which the amount due is realized and cleared in the bank.
Implying that receipt of the post-dated cheque will not be considered as receipt of payment for the purpose of checking tax due on the date of supply.
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