Credit for input tax against output tax
s 19
Open ↗19.—(1) A taxable person must, in respect of supplies made by the taxable person, account for and pay tax by reference to such accounting periods as the Minister may by regulations prescribe (called in this Act a prescribed accounting period) at such time and in such manner as may be determined by the regulations and such regulations may make different provisions for different circumstances. (2) Subject to this section, a taxable person is entitled at the end of each such period to credit for so much of the taxable person’s input tax as is allowable under section 20, and then to deduct that amount from any output tax that is due from the taxable person. (3) Subject to subsection (4) —(a) “input tax”, in relation to a taxable person, means the following:(i) tax on the supply to the taxable person of any goods or services; (ii) tax on the reverse charge supply treated as made by the taxable person (as a recipient) to himself, herself or itself under section 14(2); (iii) tax paid or payable by the taxable person on the importation of any goods, being (in any such case) goods or services used or to be used for the purpose of any business carried on or to be carried on by the taxable person; and (b) “output tax” means tax on supplies which a taxable person makes.[52/2018] (3A) For the purpose of subsection (3)(a)(iii), tax payable by a taxable person on the importation of goods does not include any tax that is accountable pursuant to regulations made under section 27A until such time as the tax has in fact been accounted for in accordance with those regulations.[20/2010; 52/2018] (4) Where —(a) goods or services supplied to a taxable person; (b) distantly taxable goods or services that are the subject of a reverse charge supply of a taxable person; or[Act 34 of 2021 wef 01/01/2022] (c) goods imported by a taxable person, are used or to be used partly for the purposes of a business carried on or to be carried on by the taxable person and partly for other purposes, tax on supplies and importations must be apportioned so that only so much as is referable to the taxable person’s business purposes is counted as the taxable person’s input tax. [52/2018] (5) Subject to subsections (5A), (6) and (7), if either no output tax is due at the end of the period, or the amount of the credit exceeds that of the tax, then, the amount of the credit or (as the case may be) the amount of the excess must be paid to the taxable person by the Comptroller.[20/2010] (5A) In an accounting period —(a) where the tax accounted for by the taxable person pursuant to regulations made under section 27A is equal to or exceeds the amount of credit or excess referred to in subsection (5), the amount of the credit or excess is nil; and (b) where the tax accounted for is less than the amount of credit or excess, the amount of the credit or excess is the amount of the credit or excess less the amount of that tax.[20/2010] (6) The whole or any part of the credit may, subject to and in accordance with regulations, be held over to be credited in and for a subsequent period; and the regulations may allow for it to be so held over either on the taxable person’s own application or in accordance with general or special directions given by the Comptroller from time to time. (7) Where at the end of any period an amount is due under subsection (5) to a taxable person who has failed to submit returns, to comply with any reasonable request by the Comptroller for information or to pay tax or penalty for any period as required by this Act, the Comptroller may —(a) withhold payment of that amount until that person has submitted the returns, complied with the request or paid the tax or penalty, as the case may be; and (b) deduct from the amount due any tax or penalty which the taxable person is liable to pay and which remains unpaid. (8) No deduction may be made under subsection (2) nor any payment made under subsection (5), except on a claim made in the manner and within the time prescribed by regulations. (9) In the case of a person who has made no taxable supplies in the period concerned or any previous period, payment under subsection (5) shall be made subject to conditions (if any) imposed by the Comptroller as the Comptroller thinks fit, including conditions as to repayment in specified circumstances. (10) Subject to subsections (8) and (9), any payment due under subsection (5) must be paid within the time prescribed by regulations. (10A) Where the Comptroller makes any payment under subsection (5), the Comptroller may deduct from the payment any expenses that the Comptroller may incur in making the payment.[52/2018] (11) If the Comptroller fails to make payment within the prescribed time, interest on such amount as is outstanding is, subject to such conditions as may be prescribed, to be paid to the taxable person at the rate prescribed and calculated in accordance with the regulations. (12) Except as the Comptroller otherwise allows, where —(a) a taxable person fails to pay the taxable person’s supplier the consideration or any part thereof for the supply of any goods or services made by the taxable person’s supplier to the taxable person; and (b) the taxable person has credited under subsection (2) the input tax to which the consideration or the part thereof which the taxable person failed to pay relates, the taxable person must account of an amount equal to such input tax — (c) in the prescribed accounting period during which the initial specified period expires; and (d) in accordance with the method which the taxable person was required to use when the taxable person first credited the input tax, and the taxable person must repay such amount to the Comptroller at the same time as any tax in respect of the prescribed accounting period would be payable by the taxable person. [38/2005] (12A) Where a taxable person —(a) has complied with subsection (12); and (b) during the subsequent specified period, pays the taxable person’s supplier the whole or part of the consideration for the supply of goods or services referred to in subsection (12)(a), the taxable person is entitled to treat an amount equal to the input tax relating to the payment referred to in paragraph (b) as if it were input tax for the prescribed accounting period during which the payment was made. [38/2005] (13) The Minister may by regulations provide —(a) for tax on the supply of goods or services to a taxable person, or paid or payable by the taxable person on the importation of goods, to be treated as the taxable person’s input tax only if and to the extent that the charge to tax is evidenced and quantified by reference to such documents as may be specified in the regulations or as the Comptroller may direct either generally or in particular cases or classes of cases; (b) for a taxable person to count as the taxable person’s input tax, in such circumstances, to such extent and subject to such conditions as may be prescribed, tax on the supply to the taxable person of goods or services or paid by the taxable person on the importation of goods even though the taxable person was not a taxable person at the time of the supply or payment; (c) for a taxable person that is a body corporate to count as its input tax, in such circumstances, to such extent and subject to such conditions as may be prescribed, tax on the supply or importation of goods acquired for it before its incorporation or on the supply of services before that time for its benefit or in connection with its incorporation; and (d) in the case of a person who has been, but is no longer, a taxable person, for the person to be paid by the Comptroller the amount of any tax on a supply of services made to the person for the purposes of the business carried on by the person when the person was a taxable person. (14) The Minister may by regulations provide, in relation to such supplies and importations as the regulations may specify, that tax charged on them or any part thereof is to be excluded from any credit under this section; and —(a) any such provision may be framed by reference to the description of goods or services supplied or goods imported, the person by whom they are supplied or imported or to whom they are supplied, the purposes for which they are supplied or imported, or any circumstances whatsoever; and (b) such regulations may contain provision for consequential relief from output tax. (14A) For the purposes of this section, where a supply of any goods or intellectual property rights is made by way of a sale, lease or licence of any interest in or right over the goods or intellectual property rights to a bare trustee (with such interest or right to be held as a bare trustee), the supply to the bare trustee is treated as a supply made to the persons or person for whose business the bare trustee holds the interest or right.[31/2014] (15) In this section —“initial specified period” means a period of 12 months after the due date for payment of the consideration or the part thereof (as the case may be) by the taxable person to the taxable person’s supplier; “subsequent specified period” means —(a) where the prescribed accounting period during which the relevant input tax was first credited under subsection (2) ends before 1 January 2007, a period —(i) commencing on the day immediately following the end of the initial specified period; and (ii) ending on a day 6 years after the end of that prescribed accounting period; or (b) where the prescribed accounting period during which the relevant input tax was first credited under subsection (2) ends on or after 1 January 2007, a period —(i) commencing on the day immediately following the end of the initial specified period; and (ii) ending on a day 5 years after the end of that prescribed accounting period.[38/2005; 28/2007; 42/2020]