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Can a vendor claim input VAT on a mini bus taxi bought to transport passengers?

23 March 2015   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

Q: A client wants to buy a mini bus taxi to transport passengers. Can he claim input VAT on the purchase price?

A: From the facts provided we don’t know how the minibus will be used by the enterprise.  If, for instance it is used for fare paying passengers, it would be to make an exempt supply and no input tax would arise (no deduction). 

A minibus is specifically included in the definition of motor car (in section 1 of the Value-Added tax Act).  Section 17(2)(c) the denies the deduction of the input tax in respect of any motor car supplied to (or imported by) the vendor.  The only exception to this rule is where the motor car (the minibus) is acquired by the vendor exclusively for the purpose of making a taxable supply in the course of an enterprise which continuously or regularly supplies motor cars (by way of sale, under an instalment agreement or by way of rental at an economic rental consideration). 

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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