What is VAT?
VAT (Value Added Tax) is a tax paid by buyers of goods and services. VAT is calculated on the price of goods or services. A VAT return must be filed, and payment made each month. VAT came into effect on January 1, 2023.
Who Pays the VAT?
VAT is an indirect tax, meaning the business acts as an intermediary to collect VAT from consumers and then remits it to the Tax Office. So, the consumer ultimately pays the VAT.
The VAT Rates Are as Follows:
– 10%
– 0%
– 5%
– 25%
The standard VAT rate is 10%, meaning the supply and/or import of goods, as well as the provision of services, is subject to 10% VAT. There are also VAT exemptions.
When Are You Liable for VAT?
You are liable for VAT if you achieve an annual turnover exceeding SRD 1,000,000 through one or more VAT-taxable activities. VAT-taxable activities include all economic activities (supply of goods and services) that are not exempt from tax, as outlined in Appendix 2 of the VAT Act. If you are liable for VAT, you must register.
If your turnover is SRD 1,000,000 (excluding VAT) or lower, and/or you expect a turnover of no more than SRD 1,000,000 (excluding VAT) in the coming year, you are not required to register.
What Counts Towards the Turnover of SRD 1,000,000?
The taxable turnover is the total amount received from customers, excluding VAT itself, meaning VAT is not counted as part of taxable turnover. This includes turnover from the supply of goods and services taxed at VAT rates of 25%, 10%, 5%, or 0% (including export of goods). Turnover from the supply of exempt goods and services should not be included in the taxable turnover threshold of SRD 1,000,000.
How Do You Calculate VAT?
You calculate VAT on the fee you charge for your goods or services. This fee often includes several components: the price of the goods or services provided and any additional costs. VAT is calculated on the total amount. See this example calculation for clarification.
Example Calculation
The VAT return must be submitted between the 1st and the 15th of the month for the previous month. Returns can be filed through the online portal after registration.
If you haven’t registered yet, you can do so here.
After completing the return, you can proceed to pay your VAT. VAT payments must also be made between the 1st and the 15th of the month for the previous month. Be sure to include the payment reference when making your payment.
The payment reference for VAT consists of the following
– FIN (xxxxxxxxxx 1000000184)
– Medium code (mc): 11 for VAT
– Type (s): preliminary return/final return
– Year (yyy): 024 (for the year 2024)
– Period (tv): 01 for January, up to 12 for December
An example of the payment reference for VAT for January 2023 is: 100000018411102301
How Do I File an Objection?
Did you make an error in your VAT return? Or do you disagree with the VAT amount paid on your return? Or do you disagree with a notice from the tax authority? In these cases, you can submit an objection letter to the Tax Office.
Send your objection letter digitally to: support@azerraservices.com
In the subject line of your email, indicate that it is an objection letter and include your trade name and FIN number.
Your objection letter should include at least:
– The amount you are disputing,
– The period to which the objection applies,
– The grounds for your objection,
– The incorrect return, and
– The reason for the objection.
Once received, we will process your objection as soon as possible and keep you informed.