Value Added Tax (“VAT”)
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Output Tax
Output tax is the tax levied when a business provides taxable purveyances (VAT on sales).
Input Tax
Input tax is the tax levied with regard to goods and services purchased for providing taxable purveyances (VAT on purchases).
Exempt Deliveries
The provision of some goods and services are exempt from VAT. Input tax with regard to such purchases is not reclaimable. Educational services, bursaries and donations, for instance, are exempt from VAT.
Reclaim Percentage of a Cost Centre
All cost centres have a VAT reclaim percentage that varies between 0% and 100%. This percentage is calculated as a percentage of taxable deliveries over total deliveries (taxable plus non-taxable sales). This percentage has no connection to the output VAT that has to be paid to the Receiver of Revenue. All payments to the Receiver normally comprise the full 15% VAT on a specific taxable income. The VAT reclaim percentage can be determined with programs FFB007P and FFB184P.
