The VAT Act contains several prescribed methods on treating
VAT, accounting for VAT and declaring VAT. Considering the fast
pace at which business is conducted daily, here are some useful
tips on ensuring your business maintains momentum while being on
the right side of the Act.
10 Important Principles
1. VAT registered entities collect VAT (output tax) on behalf of
Government – please make sure that you pay it over on
time, otherwise penalties and interest will be charged.
2. All prices charged, advertised or quoted by a registered
person must include VAT at the applicable rate. (Presently 15% for
standard rated supplies).
3. VAT charged on supplies made (output tax) less VAT paid to
your suppliers (input tax) = the amount of VAT
4. You need a valid tax invoice with your full name and VAT
number indicated on it as proof of any input tax deductions which
you want to make. You should also keep records of all your tax
invoices and other records of transactions for at least five (5)
5. Goods exported to clients in an export country are charged
with VAT at 0%. However, if delivery takes place in Namibia, you
must charge VAT at 15% to your client. If your client is a
registered person, the VAT charged may be deducted as input tax. If
your client is not a registered person, and the goods are
subsequently removed from the country, a claim for a refund of the
VAT may be made at the offices of the VAT Refund Administrator (the
6. You may not register for VAT or deduct any input tax on goods
or services acquired to make exempt supplies, for private use or
other non-taxable purposes. Also, as a general rule, input tax may
not be deducted where the expense incurred is for the acquisition
or rental of a passenger vehicle or entertainment, even if utilised
for making taxable supplies.
7. You are required to advise the Namibian Inland Revenue
Department within 21 days of any changes in your registered
particulars, including any change in your authorised
representative, business address, banking details, trading name, or
if you cease trading.
8. If you have underpaid VAT as a result of a mistake, report it
to your Namibian Inland Revenue office as soon as possible, rather
than leaving it for their auditors to detect.
9. You can pay your VAT by cheque if less than N$500 000 or with
electronic funds transfer (EFT).
10. It is important to submit returns on time. Penalty on late
submission of a VAT or Import VAT return is N$100 per day. Penalty
on late payment of VAT or Import VAT is 10% per month on tax
payable, limited to 100%. Being compliant with the above will
reduce the risk of VAT becoming a cost to your business.
Being compliant with the above will reduce the risk of VAT
becoming a cost to your business.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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In Star Deep Water Petroleum Ltd v. Lagos State Internal Revenue Service, the Tax Appeal Tribunal (TAT) Lagos division held that an assessment that is not compliant with the law cannot become final and conclusive.
Section 27(i) of the Companies Income Tax Act disallows "any expense of any description incurred outside Nigeria for and on behalf of any company except of a nature and to the extent that the Board ("FIRS") may consider allowable".
On the 27th of October, 2015, the Tax Appeal Tribunal, Lagos Zone delivered a judgment in favour of the Shell Petroleum Development Company of Nigeria Limited in the above stated case.
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