What is a warranty?
A guarantee issued by the retailer or manufacturer to the consumer, promising a repair if necessary within a specified period time. This blog is briefly about how warranties are effected by VAT implementation.
Normally there are 2 types of warranties:
- Free with the original purchase is treated as composite supply.
- Extended warranty for an additional charge such as Supply of insurance, 5% VAT.
Other specific issues :
- Supply of replacement goods (scope of the warranty) – Not subject to VAT
- Charge for replacing goods under warranty – Subject to VAT
- Manufacturer funding of warranty outside UAE (work performed in UAE) – Subject to VAT
We, at msi Alnoman and Ravi, are qualified to assist you through every step for your business. Our thorough knowledge in this field is ideal to guide your business, minimizing risk, to benefit your business.
Stay posted to know more about other VAT rules.To find more information on VAT you can visit the following:–
- Ministry of Finance
- Introduction to VAT
- Understanding VAT
- What do we need to when VAT comes into effect?
- Special VAT rules
- Reverse Charge Mechanism
- Categories of VAT
- Administration of VAT -FTA
- Time of supply
- What is supply
- Challenge The FTA decision
- Filing Tax Return
- Tax Audit
- VAT Grouping
- Zero- rating Transport Services
- Profit Margin Scheme