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Claiming VAT On Your Purchases

Exempt Goods & Services

 

Some businesses registered for Value Added Tax (VAT) in accordance with the VAT Act may be trading in supplies which are standard-rated (15%) zero-rated (0%) and exempted. These businesses are deemed to be trading in mixed supplies. Input tax payable on exempt supplies cannot be claimed and as such is not deductible from output tax collectible.

Where a registered supplier is trading in mixed supplies, no apportionment should be made to input tax that is directly allocable to exempt or taxable supplies. Expenses such as rent or repairs are some of the expenses that may not be directly attributable and should be apportioned. Where a registered taxpayer trades in mixed supplies and zero point nine zero or 0.90 (90%) of those supplies are taxable, the full amount of input tax is deductible.

The adjustment essentially allows the registered taxpayer to allocate the portion of the input tax that is allowable against the output tax collected.

 

APPORTIONMENT RULE

 

Where a registered supplier is trading in both taxable supplies [standard-rated (15%), reduced rate (10%) and zero-rated(0%) ] and exempt supplies, the apportionment rule is as follows:

 

A/ B X C = Allowable Input Tax

A = Taxable Supplies  (Input tax not directly attributable)

B =Total Supplies  (Total taxable supplies)

C = Input tax not directly attributable

 

Example:

A supermarket’s total supplies for the period amounts to EC $ 15,000, with the taxable supplies of $ 13,000, and exempt supplies of $2,000. The input tax incurred for the period amounts to $2,000 of which $600 is not directly allocable.($1,400 directly allocable)

 

Based on the above formula, of the $600 not directly allocable, the following amount is allowed as an input tax deduction against output for the period.

 

Formula = A / B X C  

Thus = 13000 / 15000 X 600 = 520

 

The total amount of input tax allowed as input tax credit amounts to $ 1 920 (1400+520)

 

Example:

A business trades in both taxable and exempt supplies. The total supplies for the period equals $25,000, with taxable supplies of $23,500, exempt supplies total $1,500.

The total input tax for the period amounts $3,000, with input tax not directly allocable of $400.

As the taxable supplies exceed zero point nine zero or 0.90 (90%) of total supplies, the full amount of input tax ($3,000) is deductible from output tax for the period.

23,500/25,000 = 0.94 or 94%.

 

Contact Us

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

Tel: (758) 468 2800
Fax: (758) 452 4984
Email:
vatcoordinator@vat.gov.lc
vatinfo@vat.gov.lc

Useful Links

Inland Revenue Department  www.irdstlucia.gov.lc

 

Government of Saint Lucia  www.stlucia.gov.lc

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