Unit 10A: VAT

Question 1

Why is VAT considered a/an:
* Indirect tax?
* Tax on consumption?

Describe the tax credit method.

Question 2

Who are the entities required to register for VAT? Are entities under the 8% rate ever subjected to VAT? If so, when?

Question 3

Who are the entities liable to pay VAT?

Answer 3

p. 2

Question 4

• Who may opt to register for VAT, but is not required to do so?
• What is the basis for determining whether an entity is required to register?
• If an entity’s main business is VAT-exempt, can they still optionally register for VAT?
• Are entities still liable to pay VAT if they’re not registered? When can they claim input VAT?

Answer 4

p. 1

Question 5

Explain the rule of regularity and the treatment of transactions incidental to business. Are there entities / transactions that are exempted from the rule?

Answer 5

p. 2

Question 6

What is the VAT treatment for services rendered on a reimbursement-at-cost basis, even if no profit was realized?

When there is a receipt of subsidies for expenses incurred, is the amount subjected to VAT?