Value Added Tax (VAT) was introduced on January 1, 2007, together with an Excise Tax (ET) on motor vehicles, petroleum, tobacco products and alcohol. VAT along with ET has replaced six (6) existing taxes, including Consumption Tax.
A business must be registered with the Value Added Tax (VAT) Department. Additionally, once registered the VAT Certificate must be displayed in a conspicuous manner within their place of business.
Registration is categorised in Section 11 of the VAT Act of 2005 as being mandatory or voluntary; the criteria governing each type of registration are listed below:
- Where the taxable activity equals or exceeds the threshold of fifteen million dollars ($15,000,000) at the end of twelve (12) months, or where the taxable activity exceeds the threshold in less than 12 months, the person carrying on the taxable activity, must register for VAT and;
- Where the taxable activity is expected to exceed the threshold in any period during the next twelve months, the person carrying on the taxable activity must register.
VOLUNTARY REGISTRATION: –
If your taxable turnover is below the G$15,000,000.00 threshold, you may apply for Voluntary Registration.
However, applicants for voluntary registration must satisfy the following criteria:
- The applicant’s business and business location must be easily identifiable;
- The applicant must demonstrate to the Commissioner – General’s satisfaction, the ability to maintain records in accordance with the requirements of Section 60 of the VAT Act;
- The applicant must demonstrate to the Commissioner, the intention to make taxable supplies. Where the applicant’s business operations have not yet begun at the time of application, or if the applicant has carried on the business for less than a calendar year, evidence of bank loans and revenue projections, contracts or other details of arrangements to make taxable supplies, feasibility studies, purchase of capital equipment, and similar information may be accepted by the Commissioner as evidence that the applicant intends to make taxable supplies.
A person who fails to register for VAT is liable to a penalty equal to double the amount of output tax payable from the time the person is required to apply for registration until the person files an application for registration with the Commissioner-General.