Coca-Cola's petition for a tax refund in the Philippines has just been denied by the Court of Tax Appeals. It's all because of incorrect record-keeping. Locally, your input tax claims will also be turned down by SARS if you don't have valid tax invoices to back up the claims. Here're two steps to follow to ensure SARS pays out your input tax claims...
While Coca-Cola Bottlers Philippines Inc says it's due 'a refund worth millions' in Vat that it overpaid in 2008 due to inaccurate record-keeping, the claim was denied.
The Court of Tax Appeals said the amount in question 'essentially represents undeclared input taxes for the second quarter of 2008, and not the erroneously paid Vat.'
That's because businesses that purchase goods and services from Vat-registered suppliers and providers are charged an input tax, which is then offset or closed to an output tax.
But in the Philippines, excess input taxes can only be claimed for refund when they're based on sales where Vat is charged at the zero-rate or on cancellation of Vat registration, when a company stops doing business.
That's why Coca-Cola's claim for a refund or tax credit was denied in the Philippines, says BusinessInquirer
Without a valid tax invoice, you have no way to prove your input tax claim to SARS…
As a Vat vendor in South Africa, it's your duty to charge output tax and claim the input tax back from SARS, as long as you can prove your claims with the required documentation, says Dee Bezuidenhout in The Practical Vat Loose Leaf Service.
So you need a valid tax invoice to prove your input tax claim to SARS.
If you don't have the tax invoice or if the invoice isn't valid, you can't claim the credit – if you do, SARS will disallow the claim and keep a close eye on any future claims you submit, says FSPBusiness
Don't forget to account for all your input tax claims properly on your Vat returns!
Then, remember that if you've claimed input tax on a tax invoice but you haven't paid your supplier within 12 months of the date of that invoice, you'll have to 'add back' the input tax.
This means you'll have to include that specific Vat amount as output tax in block 12 of your Vat return, says FSPBusiness
Following these two tips will prove to SARS that your input tax claims are legitimate, meaning SARS will be more likely to refund you for them.