Seven fringe benefits you need to account for Vat on
Goods/services given to relatives of employees;
The purchase of an asset at less than actual value;
Right of use of an asset;
Free meals and refreshments;
Free or cheap services e.g. cosmetic and skin care groups that allow employees free facials; and
Medical costs incurred by the employer.
And you must calculate Vat on each of them. But remember, if the fringe benefit is at the zero rate or exempt for Vat purposes, then you shouldn't calculate any further output tax!
Now you know what a fringe benefit is, let's take a look at how to calculate deemed Vat on company cars correctly.
If you provide a company car to a staff member, you have to make a deemed output tax calculation as follows:
Cost price of car x 0.3% x 14/114 = output tax payable
You need to do this calculation every month, for every company vehicle that you provide.
Look out for my next email where I'll talk about fringe benefit number 2 – goods/services given to relatives of employees and how to deal with the Vat.
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