in VAT by
We are a construction company. We need to collect an advance payment for a subcontract.

Can we issue a tax invoice for the advance payment if we are not registered with cash basis?

1 Answer

0 votes
by (4.8k points)

Yes it is possible as per sec 4(1)(b)

4. (1) The supply of goods shall be deemed to have taken place at the time of the occurrence of any one of the following whichever, occurs earlier: - 

(a) the issue of an invoice by the supplier in respect of the goods; or 

(b) a payment for the goods including any advance payment received by the supplier;

by
Thank You for your answer

And can u plz explain further, if we issue a tax invoice what is the impact on revenue. Should we take it as a revenue?
by (4.8k points)
If you are registered for VAT, then just issue a VAT invoice. VAT portion is payable to IRD and does not make a part of revenue.
by
Thanks, But when i asked IRD people from VAT Audit Unit, they told me if we raised a tax invoice then definetly we should declare it as a revenue though it is an advance payment.
by (4.8k points)
Yes it is revenue. I was talking about the VAT portion which is not revenue. If you raise an invoice then it is always a revenue
by
Yes if we argue in tax point yes it is revenue. But in the accounting point its not revenue.

Actually we are a construction company, getting small small subcontracts from massive companies. This month we received 6Mn advance payment. But the contract is not started yet. Planned to start it by next month since the site is not ready.

So If I take this advance payment a revenue this month there will be a huge profit in our accounts. Because this amount we received is without incurring any cost. And next month I know there will be a huge loss since all the cost relevant to that particular contract will be in next month.

Plz advice me on this

 

Thank You
by
Account it as a advance Received  & Recover it within the Project period
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