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Claiming VAT On Your Purchases

Claiming On Bad Debts


It must be remembered that a registered taxpayer accounts for VAT on the basis of time of supply which, for the normal case, is the earliest of:


(a) Date of issue of invoice;

(b) Date of payment; or

(c) Date that goods were made available or services performed.


If a person grants supplies on credit the VAT is still due on these supplies, on the earliest of invoice date or when supplies are made available or delivered. The VAT liability is not affected by non-collection of payment for the supplies made during the tax period. The Act makes provision for relief to be granted where the tax was paid on a supply that has proven to be uncollectible.


You may be allowed an input tax deduction for tax paid in respect of a taxable supply where the whole or part of the consideration for the supply is subsequently treated as a bad debt.


The input tax deduction arises on the date on which the bad debt was written off in the accounts of the registered person and the registered person satisfies the Comptroller that reasonable efforts have been made to recover the amounts due and payable. (a time period of one year is required)


Where an amount treated as being bad is recovered partly or wholly, the registered person is treated as having charged tax in respect of a taxable supply made during the period in which the bad debt was wholly or partly recovered, being an amount calculated according to the formula A X B/C where =


a) A is the amount allowed as a deduction,

b) B is the amount of the bad debt recovered; and

c) C is the amount of the bad debt previously written off.


Example: A sale of $4,600 is made including 15% VAT ($600) which subsequently leads to a bad debt being provided for. An amount of $4,400 is recovered the following year. In the tax period the bad debt is recognized, the amount of $600 is allowed as an input tax credit.


The recovered amount of $4,400 includes a portion of the VAT due; thus the following amount should be reflected as output tax in the tax period when recovered.

$600 X $4,400/$4,600 = $573.91

Contact Us

St. Lucia Inland Revenue Department
VAT Section
Manoel Street
St. Lucia, W.I.

Tel: (758) 468 2800
Fax: (758) 452 4984

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Inland Revenue Department


Government of Saint Lucia

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