Friday, January 21, 2011

WHAT FACTORS DO I HAVE TO CONSIDER IN DECIDING WHETHER TO APPLY FOR VOLUNTARY VAT REGISTRATION?

In considering whether you should register voluntarily for VAT, you should ask yourself these questions:
a. Do I make taxable sales to other VAT dealers ?
If you are not registered for VAT you cannot issue tax invoices on which your customer VAT dealer can claim credit for the tax. Your customer will therefore have to charge a higher price for his sales if he cannot claim a credit for the VAT. In this case he might choose to trade with another VAT dealer and you would lose business.
 
b. Do I trade, principally with non-VAT dealers/consumers ?
In this case it is likely to be in your interest not to register for VAT.

c. What are the obligations of VAT registration ?
Once registered, you will have to account for output tax that is attributable to your taxable sales. You will also have to submit VAT returns monthly to the Commercial Taxes Department and keep proper books of accounts.
If you decide to register voluntarily, the Law requires that you must remain registered for VAT for a period of 24 months regardless of your taxable turnover.
 
d. Is my input tax credit likely to exceed the tax on the sales I make?
In this case you will benefit from VAT registration.

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