Understanding How VAT Works: Claiming Input VAT

A claim for input VAT refund would arise where the input tax is in excess of output tax. The provisions of the VAT Act require any person making a taxable supply (goods or services) to pay tax and the supply is the output hence this tax is the output tax. Where a person purchases taxable supplies for furtherance of their business the supply is input and the tax paid on the purchase is an input tax. In computing tax payable to the Respondent, it was submitted that one should subtract the input tax attributable to taxable supplies from the output tax and pay the difference to the Commissioner of Domestic Taxes. If the input tax is greater than the output tax one should carry forward the difference as a credit to the next VAT return or claim a refund as the case maybe.