Although widely practiced, some, such as the U.S. government, view these agreements as “market-distorting and ineffective.” On April 16, 1990, a statement of the policy of the President of the United States was issued, which stated that “the decision whether or not to participate in offsets […] ” No U.S. government authority can directly encourage, involve or compel U.S. companies to enter into a compensation agreement for the sale of defense products or services to foreign governments.”  The deed of compensation must be carefully established. It has the status of the primary document in accounting, which must be signed by the director and accountant of both organizations, have a seal. In 2007, new guidelines for the Kuwait Offset programme were issued following a directive from the Minister of Finance on all foreign markets related to military and non-military contracts. The National Offset Company (NOC) is a public company operated by the Kuwait Offset Program on behalf of the Ministry of Finance. The compensatory commitment remains at 35% of the monetary value of military contracts. Threshold is KD 3m, (for civil contracts is KD 10m.) Since 2007, there have been fundamental changes that make clearing requirements more efficient and complex, including multiplier systems, with greater attention to the tangible benefits to Kuwait. Offsets are of a different duration. They can be planned for 1 or 2 years, but 8-10 year plans are very common; An exceptional lag is the Al Yamamah programme, a BAE-UK offset in Saudi Arabia, in force since 1987. Clients (sovereign countries) have mechanisms in place to monitor their implementations and certify milestones in their offset programmes. An offset supervisory authority certifies the evolution of offset financial statements in percentage terms and issues offset certificates.
 These certificates may be issued to principal contractors who fulfil their compensation contract, but also to enforcement executives who have awarded the employment of principal contractors and who, as such, are registered abroad. If there are multipliers, these certificates spend the completion percentage in “credit value” (“value” X-multiplier). Offset contractors contract offset certificates through contracts or sub-contracts with the main contractor. More recently, given the importance and growth of offset practices around the world, offset measures can “sell” their certificates to other major contractors than their original contractors, as long as they have national offset commissions. In this profitable niche of the defence industry, manufactured by offset specialists, lawyers and companies – there is also a “currency” and a “trade” of offset certificates. The development of a bilateral compensation agreement has such drawbacks and many companies use it. However, tax authorities often equate a clearing transaction with an exchange agreement and require the supplier to accept VAT up front exclusively. That is not acceptable by law. If you have received such a right, please contact the arbitration. Lately, this type of case has been resolved in favour of the taxpayer.
Net deductions are not exempt from tax deductions. Often, defence compensation for personal or political reasons is more motivating than the acquisition of primary defence. It may sound irrational, but it is part of the trade. Adding to the prevailing political aspect of spending huge public funds on modern weapons, we must not underestimate the motivating importance of defence compensation in the current decision-making processes of democracies.  Major arms entrepreneurs are well aware of the power of offsets in the psychology of democracies.