The effective date of VAT registration of the company is 1st January 2023.
The client gave the company a statement stating that the goal of the purchase is to resale the same products to another customer in their current condition.
The company issued a Tax invoice with 5% VAT to the client for the goods delivered.
The client rejected the Tax invoice based on the ground that bitumen is a hydrocarbon, hence reverse charge mechanism will be applicable to bitumen.
Whether the client’s argument is correct? Does bitumen fall within the reverse charge procedure outlined in Article 48 (3)?
Basis of Opinion
Article 1 of the VAT Decree-Law
Article 48 (3) of the VAT Decree-Law
Article 48 (4) of the VAT Decree-Law
Application of the Law
Classification as Hydrocarbon:
The reverse charge mechanism provided by Article 48(3) of the Decree Law is a special mechanism that can be employed in certain circumstances, such as the supply of crude oil or hydrocarbons.
The term “Hydrocarbon” refers to any class of organic compound solely of the elements carbon (C) and hydrogen (H). On the basis that bitumen contains carbon, hydrogen as well as other components, bitumen is not a hydrocarbon.
In view of the aforementioned, bitumen and bitumen products are not considered to be hydrocarbons.
Note: Article 48 of the Decree Law is not limited to hydrocarbons, hence to the extent that bitumen is classified as, for example, crude oil, such supply may fall within the scope of Article 48(3) of the Decree Law and the company will have to apply the reverse charge mechanism where all other conditions are met.
Experience with HLB Hamt in audit experience is great pleasure. They deploy well qualified accounts team for audits.... And the amount of checking they perform give the management of the company confidence that internal controls are well in place. We are glad to see they have high standard of audit practices.read more
Professionally managed firm with commitment to the engagements taken. My company and its group are assigning our... requirements for last 12 years to HLB and we don’t have any negative remarks on any assignments.read more
In my opinion, HLB Hamt is one of the best professional firms in UAE after big4. Excellent client service, professional... and competent staff and timely delivery are their strength. Over the years they have developed the infrastructure and skill set to handle multiple verticals ie, audit, tax services, consulting, IT support etc.Wishing HLB Hamt team all the very best.read more
Thank you Team HLB hamt...Your internal auditing team put the good amount of time and inputs in helping the... organisation making considerable improvements throughout the organisational working structure and helps in building the better business.Thanks.read more
High-Performing IT Teams, I'm impressed with the knowledge level of their deputed staff, audit procedures, and... checklist adopted. Mr. Vimal especially understand the requirement and provide solution not only technical feasibility and also considered budgeting. We’re confident in their abilities.read more
Very professional team. Vimal has always given us good solution advice for various Software and IT Infra projects. We... are very Extremely satisfied working with him and his team. Wishing them success.read more
I have worked with HLB as a partner of Sage for about 2 years, they were dedicated to the success of the partnership... and kept aligned with the business plan that was agreed between our two companies. They are always ready to go the extra mile for a customer and don’t shy away from challenging circumstances. Keep up the good work and wish you all the success in the future.read more
Team of well qualified and organised professionals. Their reports are not based on numbers first they will understand... their client and their business. They are highly recommended and trust worthy.read more
We're glad to have found HLB Hamt to conduct the IT audit and risk assessment for our organization. We have learned a... lot from their team during that first project. And since then, we've continued to be in touch with them. Mr. Vimal especially is very good at presenting technical concepts in simple yet interesting ways that non-IT and business people alike would easily catch. We are very happy with the professionalism and quality of service they provide. They leave their clients nothing short of satisfied. Highly recommended.read more
Privacy & Cookies Policy
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.