VAT Compliance requirements:
- VAT registered business must record, assess and report its VAT obligations to the tax authority in accordance with the applicable law
- VAT registered businesses are required to file the VAT Return usually by the end of the calendar month following the end of the reporting period, which may be monthly or quarterly.
- Remitting any VAT payable by a specified date.
- Record keeping, documentary evidence to support VAT credit claims, in respect of all business transactions, tax invoices, debit or credit notes, Import & export records
- Records of goods & services provided for free or allocated for private use, Zero rated or VAT exempt supplies and purchases
- The remitting of VAT either on a monthly or quarterly is a serious business consideration in view of the potential cash flow implications for the business.
- – Additional considerations also be prescribed requirements pertaining to the use of electronic records, preparation of VAT audit files, time and format of records to be accessible for a VAT audit, amongst others
It’s known from experience of other mature VAT jurisdictions that businesses often struggle to address questions raised during a VAT audit by the tax authorities due to the inability to produce the complete audit trail of documentation to substantiate liabilities and entitlements reported within the VAT return.
Due to the transactional nature of VAT it would be prudent for businesses implementing VAT to put in place a combination of automated processes and tools in order to produce a VAT audit file, upon request by the tax authorities.