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Technical discrepancy in VAT payments: is offsetting possible?
Technical discrepancy in VAT payments: is offsetting possible?
For your information, we would like to inform you that during the transactions carried out by our side, a certain discrepancy occurred in VAT payments due to technical reasons. Thus, the service provider issued electronic invoices on April 5 in the amount of 5,900 AZN and on April 20 in the amount of 11,800 AZN (including VAT).
As a result of a technical error, the VAT amount related to the invoice dated April 5 was fully transferred to the customer’s deposit account, which led to an overpayment. Taking this overpayment into account, the VAT amount was correspondingly reduced during the payment of the invoice dated April 20.
As a result, for both invoices, both the principal amounts and VAT obligations have been fully settled; however, there was a difference in the distribution of VAT amounts between the invoices.
According to tax legislation, VAT offsetting is regulated by Article 175 of the Tax Code. Under this provision, VAT on purchased goods (works, services) can be offset only when both the value of the transaction and the corresponding VAT amount have been fully paid. In this case, since all payments related to the transactions have been fully completed, VAT can be offset in the relevant reporting period.
Nevertheless, in order to avoid any potential tax risks or financial sanctions in the future, it is recommended to submit the relevant transactions to the tax authority where you are registered, together with supporting documents.
For your information, we would like to inform you that during the transactions carried out by our side, a certain discrepancy occurred in VAT payments due to technical reasons. Thus, the service provider issued electronic invoices on April 5 in the amount of 5,900 AZN and on April 20 in the amount of 11,800 AZN (including VAT).
As a result of a technical error, the VAT amount related to the invoice dated April 5 was fully transferred to the customer’s deposit account, which led to an overpayment. Taking this overpayment into account, the VAT amount was correspondingly reduced during the payment of the invoice dated April 20.
As a result, for both invoices, both the principal amounts and VAT obligations have been fully settled; however, there was a difference in the distribution of VAT amounts between the invoices.
According to tax legislation, VAT offsetting is regulated by Article 175 of the Tax Code. Under this provision, VAT on purchased goods (works, services) can be offset only when both the value of the transaction and the corresponding VAT amount have been fully paid. In this case, since all payments related to the transactions have been fully completed, VAT can be offset in the relevant reporting period.
Nevertheless, in order to avoid any potential tax risks or financial sanctions in the future, it is recommended to submit the relevant transactions to the tax authority where you are registered, together with supporting documents.