VAT: ANNEX 4
VAT TERMINOLOGY
The following are some of the most commonly used VAT terms in relation to GDs:
Non-business: Activities carried out on a statutory basis, usually under a statutory monopoly and/or for no payment. They are outside the scope of VAT.
Business: Activities which, in general, are carried out in competition with the private sector. Business activities are deemed to be such by order of an annual Treasury Taxing Direction. GDs must ensure that all of their business activities are included in the current Taxing Direction.
Supplies: Goods, the exclusive ownership of which passes from one person to another, or services for which payment, in money or in kind, is made. All supplies within the scope of VAT are either taxable or exempt.
Exempt Supplies: Supplies that are not taxable because the law states that VAT is not to be charged on them. Where goods or services are exempt, the trader does not have to charge his/her customer any output tax and cannot reclaim any input tax, which may have been paid as part of the cost of making the supply. For example, many supplies of education, health and welfare are exempt.
Taxable Supplies: Supplies which are liable to VAT at the standard rate (currently 17.5%) or the zero rate (0%). There is also a reduced (5%) rate for qualifying fuel and power (mainly domestic supplies).
Zero-rated Supplies: A trader selling zero-rated goods or services does not have to charge tax to his customers. Supplies of books, newspapers and maps are examples of zero-rated supplies.
Input Tax: VAT incurred on the purchase of supplies (including imports and acquisitions) that are to be used for business purposes.
Output Tax: VAT charged on taxable supplies, i.e. the sale of goods and services.
Tax Point: The time when a supply is treated as taking place. The liability and rate of tax are determined by the supplier at the tax point.
Outside the Scope of VAT: Supplies are outside the scope of VAT if they are non-business or made by someone who is not a taxable person.
Taxable Person: An individual, firm company etc. which is, or is required to be, registered for VAT.
Page Published / Updated: May 2008