PARTIAL ATTRIBUTION OF INPUT TAX

1
PARTIAL ATTRIBUTIONOF INPUT TAX
2
Principle

• The proportion of deductible VAT is determined
  for all the tax periods ending during a calendar
  year according to a special calculation taking
  into account supplies opening right to deduct VAT
  and other supplies

Article 22(5) VAT Act
Item 5(3) Tenth Schedule
3
Principle and calculation

• Supplies with right to deduct V22(4)
• --------------------------------------------------
  --------------------------------X 100
• Supplies with right to deduct V22(4) other
  supplies Vall

Article 22(5) VAT Act
Item 6(1)(a) Tenth Schedule
4
Principle and calculation

• The calculation does not include
• the value of any supply of capital goods used in
  the economic activity of the taxable person
• the value of self-supplies
• the value of any supply which is not made by a
  taxable person acting as such

Article 22(5) VAT Act
Item 6(2) Tenth Schedule
5
Definitive and provisional ratio

•  
• The result obtained shall be
• The definitive ratio for the tax periods ending
  during this calendar year
• The provisional ratio for the following year (
  the next tax periods ending during the following
  calendar year)

Article 22(5) VAT Act
Item 6(1)(b) Tenth Schedule
6
Use of provisional ratio

• The ratio calculated for the previous year shall
  be used as the provisional ratio for the tax
  periods ending during the following year
• Total input tax is multiplied by this
  provisional ratio

Article 22(5) VAT Act
Item 6(1)(c) Tenth Schedule
7
Use of definitive ratio

• The total input tax credit for all the tax
  periods ending during the following calendar year
  shall be calculated definitively by multiplying
  the total input tax for those periods by the
  definitive ratio for that year

Article 22(5) VAT Act
Item 6(1)(d) Tenth Schedule
8
Difference

• The difference between the input tax
  provisionally deducted and the definitive
  calculation shall represent
• Either a tax due
• Or a deduction allowable
• To be accounted for in the tax return for the
  first tax period that ends in the year following
  that for which the provisional calculation was
  made or in case of cancellation of registration
  in the last tax period

Article 22(5) VAT Act
Item 6(1)(e) Tenth Schedule
9
Calculation of the definitive ratio and
regularisation - Methodology

• Classification in output and input operations
• Classification in supplies with credit and other
  supplies elimination of the amounts not taken
  into account
• Eliminate the expenses not related to the
  economic activity (exclude VAT) or on which no
  VAT was due
• Comparison and calculation of the ratio (fraction
  percentage)
• Application of the ratio to the amount of input
  tax
• Comparison between the provisional ratio and the
  definitive ratio
• Regularisation

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Alternative methods real use and specific
calculations of ratio

• Where it appears to the Commissioner that the
  method of attributing input tax according to the
  partial attribution method does not give a fair
  and reasonable result, he may by notice in
  writing to a registered person direct that the
  said method shall not apply to the attribution of
  input tax to the supplies of that person and that
  person shall adopt such other method of partial
  attribution as the Commissioner may prescribe

Article 22(5) VAT Act
Item 8 Tenth Schedule