How to handle Multiple Supplies | UAE VAT

How to handle Multiple Supplies in UAE VAT


Supply of multiple goods or services or a combination of both in the same transaction is a common business scenario. While the reasons are many for bundling these goods or services as part of the same transaction, but from the point of the supplier, what is more important is to understand the implication of VAT on such supplies. This because, based on the nature of goods or services which are supplied in a single transaction, the UAE VAT law classifies them into two categories:

  • 1. Multiple Supplies
  • 2. Single Composite Supply

Based on the nature of supply, a transaction can be classified either as multiple supplies or single composite supplies. Both the type of supplies have different VAT treatment. In this article, we will discuss about multiple supplies.

Multiple Supplies

Multiple supplies refer to the supply of more than one component of goods or services for a single price but are not bundled due to natural necessities. In other words, it is not necessary or essential that these goods or services always need to be supplied together and they can be supplied individually in the normal course of business.

In multiple supplies, different supplies made as part of the same transaction can be subject to different VAT rates. In such circumstances, where a single consideration was paid for multiple supplies that are subject to different VAT rates, the supplier must determine the value of each supply and levy VAT. This implies that goods and services supplied as part of the same transaction need to be identified individually, in order to determine the tax applicability on such supply – whether taxable or exempt, and accordingly VAT is to be charged.

Let us understand this with an example.

Mr James, a visitor from Australia, booked a hotel room in Dubai through online for AED 2,000. While booking the hotel room, Mr James also opted for extra service of being picked up by the hotel from the airport for AED 250. For the services provided, the hotel charges single price of 2,250 AED.

For a hotel to levy VAT, they need to arrive at whether it is multiple supplies or single composite supplies? For that, first, they need to identify the different type of supplies made available in the same transaction and determine whether it is essential that they always need to be supplied together.

Considering the above example, hotel accommodation and transportation services are not essentially required to be supplied together and they are clearly independent of each other. Hence, the hotel accommodation and the transportation service are two different supplies for VAT purposes and are considered as multiple supplies.

As a result, the hotel charges VAT on the hotel accommodation at 5% and treats the airport pick-up service as an exempt local transportation service. As a result, VAT is levied only on hotel accommodation services i.e. 5% on AED 2,000.

The key point for the supplier making multiple supplies in a single transaction is to determine the value of each supply and accordingly charge VAT, if applicable. To know what is single composite supply and the VAT treatment on single composite supplies, please read 'Single Composite Supply in UAE VAT'.



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