ISSUE OF THE WEEK

 
 

Point at issue:

Is VAT charged on expenses recovered from a foreign associate under a cost sharing arrangement admissible for input tax purposes?

Ruling:
 
Recovery of expenses signifies the existence of a service offered to the foreign associate on which VAT is recoverable. VAT on the portion recovered should be reflected as output VAT. The end result is that VAT on such expenses reflects as both input and output tax.

 
 
 
 
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