When drafting contracts or agreements, the inclusion of VAT (Value Added Tax) is commonly discussed and agreed upon between the parties involved. However, what happens when the agreement is silent on VAT?

If the agreement is silent on VAT, it is important to determine if VAT is applicable to the transaction or service being provided. In most countries, VAT is a tax placed on the value added to a product or service at each stage of production or distribution. This tax is usually passed onto the end consumer, making it an indirect tax.

If the transaction or service is subject to VAT, the supplier is generally responsible for paying the tax to the relevant tax authority. However, in cases where the agreement is silent on VAT, the supplier may not have included the tax in their pricing. This may result in a dispute with the buyer if the buyer was expecting the price to be inclusive of VAT.

In some cases, it may be necessary to seek legal advice to determine if VAT is applicable to the transaction or service being provided. In other cases, it may depend on the interpretation of the agreement and the intent of the parties involved.

To avoid any confusion or disputes, it is always best to include a clear statement regarding VAT in the agreement. This statement should outline who is responsible for paying the tax and whether the price is inclusive or exclusive of VAT.

In summary, if an agreement is silent on VAT, it is important to determine if VAT is applicable to the transaction or service being provided. Seeking legal advice or interpreting the agreement may be necessary in some cases. To avoid any confusion or disputes, it is always best to include a clear statement regarding VAT in the agreement.