Article by: Sandown Accountant: Kagiso Chuma
A lot of taxpayers, who’ve registered for VAT, do not claim VAT on the second-hand goods they buy, as they are unaware of the deemed input VAT provisions in the VAT Act. If you are one of them, the following article will clarify the requirements so you can claim the input VAT in your next VAT return.
In order to claim the input VAT on the second-hand goods you purchase, you need to ensure the following requirements are met:
Once you have established that you meet all the above requirements, complete a VAT264 form. You must keep this form for a period of five years from date of purchase.
Where the seller is an individual, obtain a copy of their ID and make a copy for your records. In the case of a company, obtain a copy of the company’s letterhead and verify the company's registration number.
The input VAT is calculated by multiplying the tax fraction (15/115) with the lower of the open market value of the goods on date of purchase or the purchase price.
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