A UAE VAT-registered contractor provides ongoing construction services under a contract with periodic milestone payments. For one milestone, 14 months pass after the underlying work is performed with no payment received and no tax invoice issued, because the client disputes whether the milestone was completed. Under Article 26 of Federal Decree-Law No. 8 of 2017 and its Executive Regulation, has a date of supply already been triggered for that milestone's work, and if so, when?
- No date of supply is triggered until the dispute is resolved and either a payment is made or an invoice is issued, however long that takes
- Yes, but only once the contractor issues a tax invoice, since for continuous supplies the tax invoice date is always the operative trigger regardless of elapsed time
- No, because continuous supply date-of-supply rules only apply once a formal milestone acceptance certificate has been signed by both parties
- Yes, the date of supply was automatically triggered once 12 months passed from the date the services were provided, even though no invoice was issued and no payment was received
Why D? And why not the others?
Correct answer: D. Yes, the date of supply was automatically triggered once 12 months passed from the date the services were provided, even though no invoice was issued and no payment was received
For a contract with periodic payments or consecutive invoices, Article 26 fixes the date of supply as the earliest of specified triggering events, one of which is the date on which one year (12 months) has passed from the date the goods or services were provided, and this backstop applies even if no invoice has been issued and no payment has been received by that point; since 14 months have now passed, the 12-month backstop was already triggered two months ago. The option waiting for the dispute to resolve and for payment or invoicing to occur is wrong because the 12-month rule exists precisely to prevent an unresolved dispute or an unissued invoice from indefinitely delaying the date of supply. The option treating invoice issuance as always the operative trigger is wrong because the earliest of the specified events governs, and the 12-month backstop can and did occur before any invoice was issued. The option requiring a signed milestone acceptance certificate is wrong because Article 26's continuous-supply date-of-supply rule does not condition the 12-month backstop on any such certificate being executed.
Source: UAE Federal Decree-Law No. 8 of 2017, Article 26 and its Executive Regulation (Date of Supply for Contracts including Periodic Payments)