Single Composite Supply in UAE VAT | Tally For VAT

Single Composite Supply in UAE VAT


Business supplying goods or services at times, as business strategy supply two or more goods or services in a single transaction, or supply a combination of goods and services. They are supplied together as a sales strategy, to attract more customers or the nature or type of goods or services are such that they are required to be bundled or supplied together.

In UAE VAT, the supply of more than one component in a single transaction is referred to as multiple supplies and single composite supplies. Based on the nature of supply, a supply can be either a multiple supply or single composite supply.

To know what are multiple supplies, please read 'Multiple Supplies in UAE VAT' .

Single Composite Supply broadly refers to a supply which comprises two or more supplies of goods or services, or combination of goods and services, which are naturally bundled and supplied. The UAE VAT Executive Regulations provides clarity on the supplies which should be considered as single composite supply and the applicable conditions.

Instance of Single Composite supply

As prescribed in UAE VAT Executive Regulations, a single composite supply is one which consist of the following:

  • 1.One of the component is Principal Component.
  • 2.All other components in that supply are either necessary or essential for making of the supply, including incidental elements which normally accompany the supply.
  • 3.All these components (other than principal) are not a significant part of that supply or do not constitute an aim in itself, but are instead a means of better enjoying the principal supply.

This means that the goods and services are bundled owing to natural necessities. The elements in a Composite Supply of goods and services are dependent on the elements on the 'principal components'. Though the principal components are not defined in the law, it generally refers to the pre-dominant element forming part of the composite supply, and any other dependent supply, forming part of composite supplies, are secondary to the principal supply.

Also, a supply which has two or more elements so closely linked as to form a single supply which would be impossible or unnatural to split, can also be considered as a single composite supply.

Conditions for Single composite supply

A supply will be considered as a single composite supply only when all of the following conditions are met:

  • 1. The price of the different components of the supply is not separately identified or charged by the supplier.
  • 2. All components of the supply are supplied by a single supplier.

Example of Single Composite Supply

An airline provides free access to a lounge for all business class passengers on international flights. Since the lounge access is incidental to the provision of the supply of the international flight, both components will be treated as a single composite supply subject to VAT at 0%.



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