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A technical error in payment affects the VAT credit
Technical errors made by taxpayers when making payments may affect their right to claim a VAT credit.
In a request submitted to the State Tax Service, it was stated that “A” LLC was required to pay “X” LLC AZN 33,983 as the principal amount and AZN 6,116 as VAT under an electronic invoice. However, due to a technical error, AZN 29,900 was transferred to “X” LLC’s bank account, while AZN 10,200 was transferred to the VAT deposit account.
“X” LLC fully accepted the payment and closed the outstanding debt. A request was therefore submitted to the State Tax Service asking whether “A” LLC could claim the full AZN 6,116 VAT as a credit.
It was explained that, under Article 175.1 of the Tax Code, VAT paid on goods, works and services acquired in VAT-taxable transactions may be credited when the transaction value is paid from the buyer’s bank or other payment account to the seller’s bank or other payment account, while the VAT amount is paid to the VAT deposit account.
According to the response to the request, the full AZN 6,116 VAT cannot be credited in this case. Only AZN 5,382 of VAT may be credited in proportion to the AZN 29,900 paid to the bank account.
Thus, the incorrect allocation of the payment between the relevant accounts resulted in the VAT amount not being fully eligible for credit.
Legal basis: Article 175.1 of the Tax Code.
Technical errors made by taxpayers when making payments may affect their right to claim a VAT credit.
In a request submitted to the State Tax Service, it was stated that “A” LLC was required to pay “X” LLC AZN 33,983 as the principal amount and AZN 6,116 as VAT under an electronic invoice. However, due to a technical error, AZN 29,900 was transferred to “X” LLC’s bank account, while AZN 10,200 was transferred to the VAT deposit account.
“X” LLC fully accepted the payment and closed the outstanding debt. A request was therefore submitted to the State Tax Service asking whether “A” LLC could claim the full AZN 6,116 VAT as a credit.
It was explained that, under Article 175.1 of the Tax Code, VAT paid on goods, works and services acquired in VAT-taxable transactions may be credited when the transaction value is paid from the buyer’s bank or other payment account to the seller’s bank or other payment account, while the VAT amount is paid to the VAT deposit account.
According to the response to the request, the full AZN 6,116 VAT cannot be credited in this case. Only AZN 5,382 of VAT may be credited in proportion to the AZN 29,900 paid to the bank account.
Thus, the incorrect allocation of the payment between the relevant accounts resulted in the VAT amount not being fully eligible for credit.
Legal basis: Article 175.1 of the Tax Code.