Q: Company A and
company B are in the same group of companies. All the employees are employed in
Company A. Company A recovers the costs of the employees who work for company
B, from company B. Must Company A charge output VAT on the invoice?
A: The charge from Company A to Company B in respect of the services rendered
by its employees to Company B does not in our view constitute the payment of
remuneration by an employer to an employee per proviso (iii)(a) to the
definition of "enterprise” in section 1 of the VAT Act. Therefore such service
would in our view constitute a standard rated supply for the purposes of section
7(1) VAT Act.
Disclaimer: Nothing in this query and answer should be construed as
constituting tax advice or a tax opinion. An expert should be consulted for
advice based on the facts and circumstances of each transaction/case. Even
though great care has been taken to ensure the accuracy of the answer, SAIT do
not accept any responsibility for consequences of decisions taken based on this
query and answer. It remains your own responsibility to consult the relevant
primary resources when taking a decision.
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