- 5 Marks
Question
Atakora Manufacturing Ltd is a company at Winneba that manufactures roofing sheets. The company has recently registered for VAT and is not sure about the treatment of its input VAT paid prior to VAT registration. The company has sought your guidance on how to treat input taxes paid prior to registration.
Required:
Advise the company on the deductibility rules of input VAT incurred by a company prior to VAT registration.
Answer
According to Section 48(12) of the VAT Act 2013, Act 870 (as amended) and Regulation 48 of L.I.2243, a taxable person may recover the VAT on stock and capital goods purchased or imported prior to registration, provided that:
- Ownership and Possession:
The goods are still in the ownership and possession of the taxable person at the time of registration. - Stock:
The purchase or import of the stock occurred not more than four months before the date of registration. - Capital Goods:
The purchase or import of capital goods occurred not more than six months before the date of registration. - Tax Invoice:
The taxable person is in possession of a valid tax invoice or relevant customs entries. - Inventory:
An inventory of all goods on hand must be produced on the effective date of registration. - Claim Submission:
Claims for recovery of VAT must be submitted in the prescribed form.
- Tags: Input VAT, Tax law, VAT Deductibility, VAT Registration
- Level: Level 2
- Topic: Value-Added Tax (VAT), Customs, and Excise Duties
- Series: MAR 2023
- Uploader: Joseph