Decree-law and executive regulation do not specifically provide for VAT on advance received. However, Decree-law provides for the date of supply on which tax shall be calculated.
As specified tax shall be calculated on the date earliest of any of the following dates:
- When the supplier is responsible for the transfer of goods:
- When the transfer of goods is the responsibility of the recipient:
- Where the supply of goods includes assembly and installation:
- For imported goods:
- If the goods are sold or approval or returnable basis:
- For the supply of service:
- The date of receipt of payment or the date on which the Tax Invoice was issued.
The date on which Goods were transferred if such transfer was under the supervision of the supplier.
The date on which recipient takes possession of goods.
The date on which the assembly or installation of the Goods was completed.
The date on which the Goods are Imported under the Customs Legislation.
The date on which the Recipient of Goods accepted the supply, or a date no later than (12) months after the date on which the Goods were transferred or placed under the Recipient of Goods disposal if the supply was made on a returnable basis.
The date on which the provision of Services was completed.
Clause 7 above states the date of supply will be the date of receipt of payment if the date of receipt of payment is the first incident that occurs. Implying that advance received is subject to VAT.
However, as part payment received in advance is not covered above, it is difficult to ascertain the applicability of VAT on part advance payment for the supply of goods or services.
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