Partial Exemption..!!!

With the continuation in the taxable supplies, if the taxable supplies are made to non-taxable territories then the following rule of Partial exemption will apply.

How will partial exemption work?

  • Where a VAT registered person incurs input tax on its business expenses, this input tax can be recovered in full if it relates to a taxable supply made, or intended to be made, by the registered person. In contrast, where the expense relates to a non-taxable supply (e.g. exempt supplies), the registered person may not recover the input tax paid.
  • In certain situations, an expense may relate to both taxable and non-taxable supplies made by the registered person (such as activities of the banking sector). In these circumstances, the registered person would need to apportion input tax between the taxable and non-taxable (exempt) supplies.
  • Businesses will be expected to use input tax (ratio of recoverable to total) as a basis for apportionment in the first instance although there will be the facility to use other methods where they are fair and agreed with the Federal Tax Authority.

To make you stress free regarding the applicability of the partial exemption BMS is always a call away..!!

  • BMS can help you if you are required to register and pay the Vat on partial exemption.
  • BMS can register for your VAT Certificate.
  • BMS can calculate the input and output VAT as the process itself is complicated.
  • BMS can pay on your behalf the VAT outstanding.

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