Compliance requirements under VAT

VAT Registration

Businesses and individuals engaged in any business activity whose turnover exceeds the mandatory VAT registration threshold specified by the respective national VAT laws must register for VAT. Voluntary VAT registration will be optional where the business turnover is below the mandatory VAT registration threshold – careful consideration should be given to the potential amount of VAT reclaimed on purchases by the business as well as the compliance costs in administering and reporting the tax, before making such a decision. Businesses not registered for VAT cannot charge VAT on their sales and cannot claim any VAT incurred on their inputs.

VAT Invoices

The process of charging VAT on supplies of goods and services requires businesses to issue VAT invoices. A VAT Invoice is a document that must be produced and issued by VAT registered businesses to provide documentary evidence of the sale of goods and services in compliance with the VAT law. A VAT Invoice is also required by the business as documentary evidence to support VAT credit claims, i.e. VAT incurred on the acquisition of goods and services for the purposes of the business can only be claimed if the business holds a valid VAT Invoice from the vendor.