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VAT – current topical issues

VAT – current topical issues. Leonard Muza. Agenda. Change in VAT rate Silent supplies Audits Penalties and interest Other Questions & discussion. Change in VAT rate. Purpose: increase govt revenue Authority: section 78 Effective: 1 April 2010 Increase by 2%

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VAT – current topical issues

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  1. VAT – current topical issues Leonard Muza

  2. Agenda • Change in VAT rate • Silent supplies • Audits • Penalties and interest • Other • Questions & discussion

  3. Change in VAT rate • Purpose: increase govt revenue • Authority: section 78 • Effective: 1 April 2010 • Increase by 2% • Other countries experiences: • UK > 17,5% to 20% w.e.f. 4/1/2011 • EU VAT rises in last 2 years include: Spain, Portugal, Greece, Hungary, Czech Republic and Finland

  4. VAT rate - comparatives

  5. Change in VAT rate - practical implications • Increase in cost for final consumers • Old rate applicable for supplies made prior to change; section 80 • Old rate applies on credit notes rate applies • Tax planning: to reduce cost/cashflow impact • E.g. Zero rating going concern purchases

  6. Silent supplies - characteristics • Do not form part of the day to day business activities of the enterprise • No tax invoices issued • Not aware that they are taking place!

  7. Silent supplies - examples • Company vehicles • Running costs (repairs, maintenance, insurance) attributable to private use • Utilities • Donations (cash vs. stock)

  8. Silent supplies – risk control Don’t claim input tax on benefits Conscious adjustments Cash based remuneration and donations

  9. Audit - triggers • Large refunds • Issues with other tax heads • Press articles • BURS normal selection process

  10. Audits - issues Nature of business; differs from information provided on form RTG1 Compliant tax invoices – information, time limits, original, importation documents Records kept off-shore Prohibited claims – passenger vehicles, entertainment expenses etc

  11. Penalties and interest – reduction strategies • Timeous and accurate filing and payments • apply for extensions • Arrange payment terms • Apply for waiver of penalties and interest • Provide business reasons • Demonstrate how your business is affected • Provide details of strategies put in place to ensure compliance in future

  12. Other practical issues Cheques less than P500 not accepted? Transaction charges of P10 Part payments rejected; procedures for acceptance not readily available No notification of rejected returns No standard procedures – requirements change depending on official

  13. Discussions Thank you E-mail: leonard.muza@kpmg.bw Phone: 391 2400 Cell: 7131 6143

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