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Example: Partial Exempt Trader: Value (TSHS) VAT (TSHS) VAT (Inclusive)

This document provides information about a partial exempt trader's purchases and supplies in October 2006. It then calculates the trader's deductible input tax in two different methods. In the first method, it calculates the value of the trader's taxable supplies as 330,000 Tshs. It then calculates the total value of all supplies as 400,000 Tshs. It applies a 0.825 ratio of taxable supplies to total supplies to the input tax amount of 53,500 Tshs, resulting in 44,200 Tshs of deductible input tax. The second method separates input tax into categories of tax directly attributable to taxable supplies, exempt supplies, and other business purposes. It then applies

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Cristian Renatus
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80 views3 pages

Example: Partial Exempt Trader: Value (TSHS) VAT (TSHS) VAT (Inclusive)

This document provides information about a partial exempt trader's purchases and supplies in October 2006. It then calculates the trader's deductible input tax in two different methods. In the first method, it calculates the value of the trader's taxable supplies as 330,000 Tshs. It then calculates the total value of all supplies as 400,000 Tshs. It applies a 0.825 ratio of taxable supplies to total supplies to the input tax amount of 53,500 Tshs, resulting in 44,200 Tshs of deductible input tax. The second method separates input tax into categories of tax directly attributable to taxable supplies, exempt supplies, and other business purposes. It then applies

Uploaded by

Cristian Renatus
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd

EXAMPLE:

PARTIAL EXEMPT TRADER


The taxable person indicates through his records that during the month of October 2006,
VAT was paid on his purchases as follows:

TABLE
Value (Tshs) VAT (Tshs) VAT (Inclusive)
a Sugar 50,000 10,000 60,000
b Cooking oil 75,000 15,000 90,000
c Laundry Soap 60,000 12,000 72,000
d Transportation of wheat flower and maize 10,000 2,000 12,000
e Bags for re-packing wheat 12,500 2,500 15,000
f Tax invoice books 37,500 7,500 45,000
g Electricity 10,000 2,000 12,000
h Telephone 12,500 2,500 15,000
Total 267,500 53,500 321,000

Also during the same months, the taxable person supplies goods with the value indicated
below:
Table
Value (Tshs) VAT (Tshs) VAT Inclusive
a Sugar 60,000 12,000 72,000
b Cooking oil 90,000 18,000 108,000
c Laundry soap 80,000 16,000 96,000
d Toilet Soap 100,000 20,000 120,000
e Wheat flour 40,000 exempt 40,000
f Maize 30,000 exempt 30,000

APPORTION OF INPUT TAX

FIRST METHOD
Step 1: The value of taxable supplies made is:
Tshs
a Sugar 60,000
b Cooking oil 90,000
c Laundry soap 80,000
d Toilet soap 100,000
Total 330,000

Step 2: Value of all supplies made is:


Tshs
e Sale of wheat flour 40,000
f Sale of maize 30,000
g Sale of taxable supplies ( refer the total at step 1 above) 330,000
Total 400,000
Step 3: Tax paid to supplies made to the registered person:-

1
Tshs
a Sugar 10,000
b Cooking oil 15,000
C Laundry soap 12,000
d Transportation of wheat flour and maize 2,000
e Bags for re-packing wheat flour 2,500
f Tax invoice books 7,500
g Electricity 2,000
h Telephone 2,500
Total 53,500

Step 4: 330,000 ÷ 400,000 = 0.825

Step 5: the amount of input tax to be claimed is:


53,500 × 0.825 = 44,200/=

SECOND METHOD
Step 1: Category A: a) Input tax directly attributable to taxable supplies:-

Tshs
a Sugar 10,000
b Cooking oil 15,000
c Laundry soap 12,000
Total 37,000

Category B

b) Input tax directly attributable to exempt supplies:


d Transportation of wheat flour 2,000
e Bags for re-packing wheat flour 2,500
Total 4,500

Category C
Input tax paid for the purposes of business but is not directly attributable to either
taxable supplies or exempt supplies:

f Tax invoice books 7,500


g Electricity 2,000
h Telephone 2,500
Total 12,000

Step 2
Calculate the value of taxable supplies made in the prescribed accounting period
2
a Sugar 60,000
b Cooking oil 90,000
c Laundry soap 80,000
d Toilet soap 100,000
Total 330,000

Step 3
Calculate the value of all supplies made in that period = 400,000
Sale of wheat flour 40,000
Sale of maize 30,000
Sale of taxable supplies ( refer the total at step 1 above) 330,000
Total 400,000
Step 4
Divide the amount obtained in step 2 for the period by the amount obtained in step 3
( the value of all total supplies made in the period)

330,000 ÷ 400,000 = 0.825

Deductible input tax:


 Ratio obtained in step 4 of the first method is 0.825
 Multiply the ratio by input tax in category C
 12,000 x 0.825 = 9,900/=
 The amount to be claimed is
 Tshs 37,000 + 9,900 = 46,900/=

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