If taxable supplies amount to more than 95% of total supplies, the taxpayer may claim all input tax for the period.
A taxable person who is registered from a specified effective date and who has in stock on the effective date goods on which VAT has been paid, may claim credit or refund of VAT, provided that:
the supply or input occurred not more than four months prior to the date of registration; and
in the case of capital goods, the goods have been held for a period not exceeding six months from the date of registration.
A taxable person whose registration has been cancelled is regarded as having made a taxable supply of all goods on hand (including capital goods) and will be liable for output tax, at the time of deregistration on all goods in respect of which he or she received input tax credit. The output tax payable is based on the open market value of the goods at the time of deregistration.
VAT is payable on the importation of goods. VAT on importation is paid by the importer.
VAT is payable on the importation of services. VAT on importation is paid by the importer.
Goods and services
The export of goods and services is zero-rated for VAT.
Refunds to foreigners
There is no specific provision regarding refunds to foreigners.
Refunds to exporters
If exports exceed 70% of the taxpayer’s total supplies, the Commissioner General may refund the excess input tax within the accounting period, although refunds are, in practice, difficult to obtain.
Place, time and value of supply
Place of supply
The place of supply of goods is the place from which the goods are supplied. The place of supply of a service is the place of business of the supplier or the place from which the service is supplied or rendered.
Time of supply A supply of goods or services occurs:
where goods are appropriated to own use, the date on which the goods or services are first applied to own use; or
where the goods or services are supplied by way of gift, the date on which ownership in the goods passes or the performance of the services is completed.
In any other case the earliest of the date on which:
goods are removed from the taxable
goods are made available to the person to whom they are supplied;
the services are supplied or rendered;
payment is received; or
the tax invoice is issued.
Value of supply The value of a supply is:
where the supply is for monetary consideration, the amount of the consideration with the addition of all duties and taxes, but excluding VAT; or
where the supply is not for monetary consideration or is only partly for monetary consideration, the open market value of a similar supply excluding VAT.
Returns and payment of VAT
A taxable person must account for VAT on a prescribed form not later than the 25th day of the month immediately following the month to which the return relates. The VAT return is in a prescribed form and states:
the amount of VAT payable for the tax period;
the amount of input tax credit or refund claimed; and
such other matter as may be prescribed.
Interest and penalties
A person who fails to submit to the Commissioner General a return on the due date is liable to a penalty of MK20,000 and a further penalty of MK1,000 for each day that the return is not submitted.