Complex transactions typically require well drafted contracts. But how close do you look at the tax clauses of your contracts or written agreements? A poorly drafted contract can often result in unintended consequences when it comes to Value Added Tax (VAT) and the parties’ responsibilities.
VAT has four fundamental areas that impact contract terms:
A contract should address each of these fundamental areas to avoid ambiguity and limit risk of VAT liability. No business person wants to face the costly mistake of being unable to collect the VAT from their customer or having to absorb unexpected VAT costs in their bottom line. Below are some common areas where tax ambiguity often exists.
The tax bulletin provides further insight into:
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