VAT paid on imported supplies; and
credits received from suppliers.
Record must also be kept of:
goods given away or taken from stock for employees’ or private use;
business purchases on which input tax is denied;
Customs documents showing the import entry and the VAT receipt; and
Records must be kept for a period of six years.
Specific VAT rules
VAT paid to the LRA by a taxpayer in respect of a taxable supply, but not received from an insolvent customer,
is allowed as a credit, where the whole consideration for the supply is subsequently treated as a bad debt. The credit arises on the later of:
the date on which the bad debt was written off in the accounts of the vendor; or
12 months after the end of the tax period in which the VAT was paid on the supply.
A supplier who wants to claim relief for bad debt must:
make a claim to the administrator, receiver or liquidator against his debtor for the VAT-inclusive amount that he is owed by the insolvent debtor; and
obtain a written statement from the administrator, receiver or liquidator that the debtor is insolvent and cannot pay the debt.
Where any amount on which a credit has been allowed is subsequently wholly or partly recovered by the vendor, the vendor must account for output tax on that amount.
Where secondhand domestic items are bought for resale from a person who is not a vendor, the taxable value of the re-supply of these items is the difference between the price paid on acquiring the goods and the amount received for their resale. VAT is thus only levied on the profit made and not the total consideration received.
Contact details – PricewaterhouseCoopers
PricewaterhouseCoopers, South Africa, can assist with any VAT issues relating to Lesotho. See contact details at the end of the chapter on South Africa.