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VAT – current topical issues

This presentation by Leonard Muza explores key topics related to Value Added Tax (VAT), including recent changes in VAT rates aimed at increasing government revenue, the implications of silent supplies that often go unnoticed in businesses, and essential audit practices. The discussion will encompass the effective date of the rate increase, examples of silent supplies, and strategies for mitigating penalties and interest. Participants will be encouraged to engage in a Q&A session to address specific concerns and practical aspects of VAT compliance.

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VAT – current topical issues

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  1. VAT – current topical issues Leonard Muza

  2. Agenda • Change in VAT rate • Silent supplies • Audits • Penalties and interest • Other • Questions & discussion

  3. Change in VAT rate • Purpose: increase govt revenue • Authority: section 78 • Effective: 1 April 2010 • Increase by 2% • Other countries experiences: • UK > 17,5% to 20% w.e.f. 4/1/2011 • EU VAT rises in last 2 years include: Spain, Portugal, Greece, Hungary, Czech Republic and Finland

  4. VAT rate - comparatives

  5. Change in VAT rate - practical implications • Increase in cost for final consumers • Old rate applicable for supplies made prior to change; section 80 • Old rate applies on credit notes rate applies • Tax planning: to reduce cost/cashflow impact • E.g. Zero rating going concern purchases

  6. Silent supplies - characteristics • Do not form part of the day to day business activities of the enterprise • No tax invoices issued • Not aware that they are taking place!

  7. Silent supplies - examples • Company vehicles • Running costs (repairs, maintenance, insurance) attributable to private use • Utilities • Donations (cash vs. stock)

  8. Silent supplies – risk control Don’t claim input tax on benefits Conscious adjustments Cash based remuneration and donations

  9. Audit - triggers • Large refunds • Issues with other tax heads • Press articles • BURS normal selection process

  10. Audits - issues Nature of business; differs from information provided on form RTG1 Compliant tax invoices – information, time limits, original, importation documents Records kept off-shore Prohibited claims – passenger vehicles, entertainment expenses etc

  11. Penalties and interest – reduction strategies • Timeous and accurate filing and payments • apply for extensions • Arrange payment terms • Apply for waiver of penalties and interest • Provide business reasons • Demonstrate how your business is affected • Provide details of strategies put in place to ensure compliance in future

  12. Other practical issues Cheques less than P500 not accepted? Transaction charges of P10 Part payments rejected; procedures for acceptance not readily available No notification of rejected returns No standard procedures – requirements change depending on official

  13. Discussions Thank you E-mail: leonard.muza@kpmg.bw Phone: 391 2400 Cell: 7131 6143

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