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Can an enterprise offset (credit) the VAT paid on operational expenses?
Can an enterprise offset (credit) the VAT paid on operational expenses?
Within the scope of its activities, an enterprise incurs a certain amount of monthly operating expenses to meet its daily operational needs. These include the purchase of drinking water and tea, cleaning supplies, and office stationery. In this regard, the question arises as to whether an enterprise that is a VAT payer may offset (credit) the VAT amount paid on the aforementioned operating expenses.
We inform you that, pursuant to Article 175.1 of the Tax Code, the VAT amount paid upon the purchase of goods (works, services) for VAT-taxable transactions may be credited, provided that the value of the transaction is paid from the buyer’s bank or other payment account to the bank or other payment account of the supplier of such goods (works, services), and the VAT amount is paid into the VAT deposit account.
In response to your inquiry, we note that the expenses incurred during the enterprise’s operations (expenses related to the purchase of tea, water, cleaning supplies, and office stationery for the office) are classified as operating expenses of the enterprise, are deductible from income, and the VAT amounts paid on such expenses may be credited.
Basis: Article 175.1 of the Tax Code.
Within the scope of its activities, an enterprise incurs a certain amount of monthly operating expenses to meet its daily operational needs. These include the purchase of drinking water and tea, cleaning supplies, and office stationery. In this regard, the question arises as to whether an enterprise that is a VAT payer may offset (credit) the VAT amount paid on the aforementioned operating expenses.
We inform you that, pursuant to Article 175.1 of the Tax Code, the VAT amount paid upon the purchase of goods (works, services) for VAT-taxable transactions may be credited, provided that the value of the transaction is paid from the buyer’s bank or other payment account to the bank or other payment account of the supplier of such goods (works, services), and the VAT amount is paid into the VAT deposit account.
In response to your inquiry, we note that the expenses incurred during the enterprise’s operations (expenses related to the purchase of tea, water, cleaning supplies, and office stationery for the office) are classified as operating expenses of the enterprise, are deductible from income, and the VAT amounts paid on such expenses may be credited.
Basis: Article 175.1 of the Tax Code.