VAT paid on purchases and expenses can be recovered by the registered taxable person. VAT recovery is available to avoid double taxation in the supply chain. Before calculating the input tax recoverable, every business has to follow the checklist to check availability.
Conditions for Input VAT recovery are:
- Inward supply of goods or services is used for providing taxable service at a standard rate and at zero rates.
- The Taxable Person receives and keeps the Tax Invoice as per the provisions of this Decree-Law.
- The recipient should pay or intend to make payment of the consideration for the supply within 6 months after the agreed date of payment for the supply
Conditions restricting Input VAT recovery are:
- VAT paid for the purpose of providing exempt supply
- Entertainment expenses incurred for any person other than employees by businesses other than government entities as specified in Article 10 and Article 57 of the Decree-Law
Example: VAT incurred on accommodation, food, and drinks provided during the event or show organized by business, or trips provided for the purpose of pleasure or entertainment will not be available for recovery.
- A motor vehicle which was purchased, rented or leased for the purpose of business but is used for personal purposes.
- Goods and services acquired for providing to employees for no charge to them and for their personal benefits. Except where it is the legal or contractual obligation of the employer to provided those goods or services.
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