The Treasury has withdrawn amendments to the Value Added Tax (VAT) Act, 2013 that proposed that registered manufacturers be allowed to claim input tax in respect of taxable supplies made to an official aid funded project subject to the approval by the Cabinet Secretary.
Input tax is cost that is added to the price when one purchases goods or services that are liable to VAT.
Manufacturers who supply goods to government projects will not claim VAT paid on materials used to make the supplies after the Treasury withdrew an earlier proposal that would have boosted their liquidity.
The Treasury has withdrawn amendments to the Value Added Tax (VAT) Act, 2013 that proposed that registered manufacturers be allowed to claim input tax in respect of taxable supplies made to an official aid funded project subject to the approval by the Cabinet Secretary.
Input tax is cost that is added to the price when one purchases goods or services that are liable to VAT.
“I wish to withdraw proposed amendment to section 18(8) of the Value Added Tax Act, 2013... This is because all official aid funded projects are currently exempted from Value Added Tax,” Ukur Yatani, Treasury Cabinet Secretary told Parliament.
Mr Yatani said all goods supplied to official aid funded projects are also exempt to VAT.
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