Part Two

Value Added Tax

VAT
 VAT can be defined as "a tax levied on the value of selling goods and
services with the deduction of the VAT imposed on goods and services
purchased as input from the VAT on out put."
According to Law No. 67 for the year 2016, there are two types of taxes:
1-Value Added tax (VAT)
This tax is generally imposed on all goods and services, Whether they appear in
the schedule tax or not . (unless excluded by special law )
2. Schedule tax
This VAT is imposed on selling or importing all goods and on services
listed in, the schedule tax of the law only by rates or values related to the listed
goods .
 Kinds of goods and services subjected to VAT
There are three kinds :
Category 1: Goods and services subjected to the schedule tax only). such as : Petrol -
Kerosene - Vegetable oils - Animal oils and fats - Chips - Fertilizers Soap - Air-
conditioned transportation between governorates (bus & railway) Tobacco of all
kinds& professional service
Category 2: Goods and services subjected to( VAT and schedule tax)
Such as : Gasoline - Beer - Alcohol– Oils- TV greater than 32 inches - Refrigerator is
greater than 16 feet - Golf cars - Limousine Cars for riding - Mobile services , ….
Category 3 : Goods and services exempted from (VAT)
Such as : Baby milk - Tea - Sugar - Coffee - Bread - Pasta except Semolina–Live
Animals - Fresh Fish – Honey-medical services
 Registration
1. Any natural or legal person shall be registered with the VAT department if
his annual sales of taxable goods and services or exempting are more than
( five hundred thousand pounds )
2 - Any natural or legal person shall be registered with the VAT department
whoever sells good or service of the schedule tax items.
3. Any importer, exporter or distribution agent shall be obliged to register
himself regardless the volume of his annual transactions.
4. The registrar obliged to collect the VAT by adding it to the price of the sales
of the goods or services .He obliged also to issue a VAT bill ( invoice ) .
5. The registrar is obliged to submit a monthly(VAT return) to the
VAT department on the form prepared for this purpose during the
next month following the end of the VAT period (one month) .
The VAT and schedule tax shall be due by the fifteenth day of June
only for May .
The Registrar obliged to submit the VAT return , even if he has not
realized taxable goods or services during the period.
6. The registrar shall maintain regular accounting books or records
prepared manually or electronically for five years following the end
of the fiscal year.
 The VAT rate
1- The general rate of the VAT on goods and services is 13% for the fiscal year
2016/2017 ,but from 1/7/2017 the VAT rate becomes 14% .
2. Exception the VAT rate on machinery and equipment used in the production
of goods or services shall be 5%( except for buses and Limousine).
3. The VAT rate shall be 0% on goods and services exported to abroad .
4- The VAT rate of the schedule tax shall be according to the rate shown in the
schedule tax, and this rate may be( in a fixed amount or percentage of the
value).
 Determination of taxable value
First: goods and services subjected to VAT only
Second: For goods and services subjected to the schedule tax only

There are two cases:

Case 1: Sales of local goods and services
     The value subjected to schedule tax shall be the amount actually paid or payable.
Case 2: Sales of imported goods and services
(A) Imported goods
The value shall be the basis for determining the customs VAT plus the customs taxes and other taxes
and levies imposed.
(B) Imported services
The value shall be the amount actually paid or payable in any form of price performance .
Third: For goods and services subjected to both schedule tax and Value Added tax VAT  
The schedule tax is calculated first and then added to the value of the goods and then VAT is
calculated on the sum of the above.
 VAT Deduction
Rule :
   The registrar deduct from the VAT due (the VAT paid on sales returns and the VAT on the

inputs , including the previous VAT on the goods and services sold by the Registrar at each stage
of the distribution .
The discount provided for in the first paragraph of this rule shall not apply to the following:
1. The schedule tax,
2. Input VAT included in the cost.
3. exempted goods and services .

VAT payable shall be calculated as follows:

Case 1: Goods and services subjected to schedule tax only
VAT payable = schedule tax on the value of goods or services sold. (Without
deducting VAT or the schedule tax on the inputs)
Case 2: Goods and services subjected to VAT only:

VAT payable = value added tax on output (on sales)

-- VAT Only on inputs (purchases).
 
case 3: goods and services subjected to value added
tax and schedule tax together

VAT payable = value added tax and schedule tax on output (on
sales) --- VAT Only on inputs (purchases)

(Without deducting the schedule tax on the inputs)

Example (1): The following are information about an (engineering office) offering
a service subjected to the ( schedule tax) only for November 2020 .
1-The total value of invoices issued L.E 16000
2-The total value of supplies purchased during the month 5000 L.E with VAT 700
L.E.
3- schedule tax rate is ( 10% ).
Required :
1-Determine the deadline for the submission of the schedule tax return for this
month. 2-Determine the amount of the schedule tax payable.
Solution
1-The deadline for submission of the VAT return for the month of November 2020
is one month after the end of this month, ( 31/12/2020 ).( It was two months
before October 2020).
2-Determe the amount of the schedule tax due.
Since the office is subjected to the schedule tax only, it is not entitled to
deduct the previous VAT on the input :
Example (2): The following are information about a service office offering a
service that is subjected to schedule tax only and registered with the VAT
department for April 2020:
1 - The total value of invoices issued L.E 20000 .
2 - The total value of supplies purchased during the month L.E 5000 with VAT
paid 700 L.E. .
Required :
1- Determine the last date for submitting the VAT return for this month.
2. Determine the amount of the VAT due.
Solution
1- The deadline for submission of the VAT return for the month of April 2020 is
( 31/5/2020 ).
2- Determining the amount of VAT (This office is subjected to the schedule tax
only.)
Thus It has not the right to deduct the VAT on its supplies.
VAT payable = schedule tax on sales   = 20000 × 10% = 2000 L.E.
Example (3):
The following are information about a factory registered in the VAT
department produces items not subjected to schedule tax for December
2020.
1-Total value of sales invoices issued during the month 300,000 L.E.
2-Total value of inputs purchased during the month L.E 220,000 .
3-VAT rate on the product and supplies is 14%.
Required:
.1-Determine the deadline of submit the VAT return for this month.
2-Determine the amount of VAT due.
 Solution
1- The deadline for submit the VAT return for December 2020 is one month
after the end of the month at 31/1/2021
2- Determine the amount of VAT due.
     As this commodity is not subjected to the schedule tax and is subjected
only to VAT :
VAT payable = VAT on output -- VAT on inputs
) =              300,000x14% ) -- (220,000 x14% )    
=        (42000 -30800 (
=           11200 L.E.
Example (4):
In the last example, we assume that the commodity produced is
subjected to schedule tax ( of 5% ) and also subjected to ( VAT.)
Required :
Determined the amount of the schedule tax and the VAT .
Solution
 Because the commodity is subjected to the schedule tax and VAT,
{the schedule tax is calculated first and then VAT is calculated on the (total
value of the item + schedule tax) then deducted the VAT on input} .
 
schedule tax = Value of the product × schedule tax rate.
VAT = { (value of the product + schedule tax) X VAT rate -- (VAT on
input) }
*schedule tax = 300,000 × 5% = 15000 L.E.
*VAT = (300000 +15000) × 14% -- ( 220000 × 14% )
         =(315000 × 14% ) -- (220000x 14% )
         = 44100 -- 30800
= 13300 L.E.
*Total taxes due.
           ( schedule tax + Value Added tax)
            =( 15000 + 13300) = 28300 L.E.
Example (5):
The following are information about an industrial firm producing air
conditions for January 2021:
Sales of different types of air conditions
(950,000L.E.) during the month (other than the guarantee ).
2 - The total purchases of production input L.E 400,000 allocated with
a value added tax 56000L.E. .
3 - Air conditions are subjected to the schedule tax ( 8% ) in addition
to the value added tax .
4 - The amount of L.E 1000 guarantee on each air condition unit .
(The number of the units sold is 120 )
Required: Determined the amount of the schedule tax and VAT.
 Solution
- As this commodity is subjected to the schedule tax and value added tax , the
schedule tax is calculated first. The value added tax is then calculated on the total
value of the item + the schedule tax.
- The 1000 L.E. is charged for each air condition on the guarantee, in addition to
the sales price, it is subjected to VAT only (the maintenance service associated
with the guarantee process is not included in the services subject to the schedule
tax)
Schedule tax = 950,000 × 8% = 76000.
Value Added tax(VAT) = {(sales + schedule tax) X
VAT rate} + (guarantee x VAT rate) – (input value X VAT rate)
= { (950,000 + 76000) × 14%} + ( 1000 × 120 × 14%) -- ( 400,000 × 14%)
= 143640 + 16800-- 56000 = 104440 L.E.
Total taxes= 76,000 + 104,440 = 180,440 L.E.
 Example (6):
The following are information about a retail business registered in vat
department for March 2020 .
1. Total sales during the month L.E228,000 (selling price to the
consumer including VAT).
2. Total purchases during the month of the factories and wholesale
stores L.E 160,000
3. The goods are not of schedule items.
Required: Determine the amount of the VAT payable.
Solution
Since the business sells to the consumer at a sale price including
VAT, it is necessary to determine the amount of ( the VAT factor not
the VAT rate)
 VAT rate 14 14
VAT factor = ------------------------- = ----------------- = ------------
                 ( 100+ VAT rate) 100 + 14 114

VAT on sales = Sales Value x VAT Factor

                         14
= 228,000 x --------- =28,000 L.E.
                         114                                  
VAT paid on purchases = Value of purchases × VAT rate
                                         = 160000 x 14%
                                          = 22400 L.E.
VAT payable    = ( VAT on sales --- VAT on purchases)
                   = 28,000 -- 22400 = 5600 L.E.
Example (7):
The following are information about a factory produces electrical
items, sold to one of the customers the following items on 20/2/2020:
1. Refrigerator 14 feet for 12,000 L.E without the VAT.
2. Refrigerator 20 feet for 24,000 L.E without the VAT & without
schedule tax 8% .
3. Gas heater for 7,000 L.E without the VAT.
4. Split air condition for 15,000 L.E without the VAT& without schedule
tax 8% .
5. TV 40-inch for 13,000 L.E without the VAT & with out schedule tax 8% .
Required :
1. Calculate the VAT payable on each item.
2. Prepare the VAT invoice for this customer.
 Solution
(1) For the refrigerator 14 feet
       This refrigerator is subjected to value added tax with 14% (the date of sale after 1/7/2017) and
is not subjected to the schedule tax because it does not exceed 16 feet .
VAT payable = The price of selling the refrigerator X VAT rate
                      = 12000 x 14% = 1680 L.E.
(2) For the refrigerator 20 feet
      This refrigerator is subjected to the schedule tax with 8% plus VAT with 14%( as it is more than
16 feet.)
schedule tax = Sales Price × Schedule tax rate
                   = 24000 × 8% = 1920 L.E.
VAT = (Sales price + Schedule tax) × VAT rate
         = (24000 + 1920) × 14% = 25920 × 14% = 3629 L.E.
Total Tax = 1920 + 3629 = 5549
(3) for the Gas heater
      Gas heater is not a schedule item and therefore is subjected to value added VAT only.
VAT= Sales Price × Value Added tax rate = 7000 x 14% = 980 L.E.
4) For Split Air Condition
      This product is subjected to the schedule tax of 8% plus VAT of 14%.
Schedule tax = Sales Price × schedule tax rate = 15000 × 8% = 1200 L.E.
VAT = (sales price + schedule tax) × VAT rate
         = (15000 + 1200) × 14% = 16200 x 14% = 2268 L.E.
Total tax = 1200 + 2268= 3,468 L.E.
5) For TV 40 inch
      As this TV is more than 32 inches, it is subjected to schedule tax of 8% plus
VAT of 14%.
Schedule tax = 13000 × 8% = 1040 L.E.
VAT          = (13000 + 1040) × 14%  = 14040 × 14% = 1966 L.E.
Total Tax = 1040 + 1966 = 3006 L.E
 
 VAT Invoice
Factory Name: …….. Serial Number ……………
Address: ……… Date………….
Telephone number: ………….. VAT registration NO…….
Sold to: …………Address: ……… Registration NO…
Value Category quantity Unit schedule VAT rate Notes
price tax rate

12000 Fre 14 1 12000 -  

1680 VAT       14%  
24000 Fre 20 1 24000  
1920 schedule tax     8%    
3629 VAT       14%  
7000 Gas heater 1 7000 -  
980 VAT       14%  
15000 Air cond. 1 15000  
1200 schedule tax     8%    
2268 VAT       14%  
13000 Tv….. 1 13000  
1040 schedule tax     8%    
1966 VAT       14%  
             
71000 Total value          

4160 Total          
schedule tax
9543 Total vAT          
             
84703 Total Value          
             
 VAT refund
Article (30) of the Law determined the cases in which the VAT is refunded within
forty-five days from the date of submitting the application supported by the documents:
1. The previous VAT paid or charged on goods and services exported.
2- The VAT that was collected by mistake.
3. A credit balance of more than six consecutive VAT periods.
4. The previous VAT payable paid on machinery and equipment used for the production
of a taxable goods or service subjected to the VAT ( except for buses and limousine cars)
In all cases, the documents proving the VAT payer's right to deduct or refund the
VAT must include a certificate signed by an accountant who is registered in the
accountants and auditors schedule tax, stating that the VAT payer is allowed to refund
the VAT
 VAT collection
* The registrant must pay the VAT payable tax monthly to the VAT department
at the same time of submitting the VAT return .
* The VAT on imported goods must be paid in the stage of release it from the
customs area .
* The VAT and schedule tax on machines &equipment imported which are
used in producing exempted product from one of VAT or schedule tax or the two
taxes can be paid as follows :
1. 5% of the VAT or schedule tax must be paid of the time of temporary release in
the custom department .
2.The remainder of the VAT or schedule tax is paid through 4 annual
installments , the first one is after two years of the temporary release .
*For buses & Limousine cars imported for tourism purposes , the
VAT & schedule tax are paid as follows
1. 25% of VAT or schedule tax must be paid of the time of customs
temporary release .
2. The remainder must be paid through 2 annual installments , the
first one is after one year of the temporary release .
 Accounting books and records

The Registrar shall keep the books and records provided for in the Commercial
Law No. 17 of 1999, as well as regular and manual accounting records or books,
which are :
A) Essential books
1- Purchase book: It contains the invoices of local purchase and certificates of
customs procedures of imported goods .
2. Sales book: Contains VAT invoice data issued for local sales of goods and services
and exported goods .
B) Other books:
3- The return book: It includes the sales invoices and the back-up data
from the discount and addition notification data.
4- Export Book: It includes the data of the exported goods including the
customs issued certificate number, the date of export, the export port and
destination.
5 -Inventory book: contains the movement of raw material and complete
products stock.
6 – The Journal : It records all business operations carried out, including
personal or private withdrawals and internal work .
7- VAT Summary
 ( 1 ) Purchase book
Value without VAT

Date Supplier name Supplier reg. No invoice No Supplier VAT Schedule Gross VAT Total amount

                 

                 

                 

( 2 ) Sales book
In value
without VAT
Customer
Date Customer Name invoice No VAT Schedule Gross VAT Total
reg. No

                 

                 

                 
 Violations
Article( 66) of the law provides for the following violations:
1. Delay in submitting the monthly VAT return and paying the VAT
payable and the schedule tax for the period specified in Article
(15) of the law (not to exceed thirty days –one month from the
end of the VAT period).

2. Provide false data on sales of taxable goods or services if there is

an increase in what is stated in the monthly VAT return.

3 - Discovery of a shortage or increase in goods deposited in the free

zones( in the violation of the Customs Law.)
4- Non notification the VAT department of the changes that have
occurred in the data application for registration within the specified
time.

5. Non enabling the employees of the VAT department to carry out

their duties

The penalty for any of these violations shall be determined by article

(67) as follows:
"Shall be punished by a fine of not less than five hundred pounds ( L.E
500 ) and not exceeding five thousand pounds ( L.E 5000 ) as well as
the VAT and schedule tax and the additional VAT payable".
 VAT evasion
Article (68) of the law specifies the cases that represent the evasion of the value added
VAT and the schedule tax, namely (such as ) :
1- Selling the goods or performing the service or importing any of them without VAT
return or VAT due.
2. The deduction of the VAT or the schedule tax in whole or in part without any right .
3 - Submit false documents or records.
4 – Non keeping regular accounting books or records .
Article (67) of the Law provides for the penalty of VAT evasion as follows:
 The VAT evasion shall be punishable by imprisonment for a period of not less than
three years and not exceeding five years and a fine not less than five thousand pounds
and not exceeding fifty thousand pounds or one of these two penalties.
 The penalty provided for in the first paragraph of this article shall be doubled in case of
repeated offense within three years.
 In all cases, the crime of evasion of VAT and schedule tax of crimes against honor and
honesty.
 Imported goods and services
Articles (5, 6 and 7) of the Law and Articles (7, 8 and 9) of the Executive Regulations regulate the process
of imposing value added VAT and schedule tax on imported goods and services as follows:
1. The VAT shall be levied for imported goods, whatever the purpose of their importation,
- For trade within the country.
- For personal consumption.
-For private use.
-For the purpose of trading within free zones,.
2. The VAT shall be imposed in the following stages:
-Phase of release from Customs area.
-In all stages of its circulation within the country after the customs release, (sold by the
importer, wholesaler or retailer)
3. The VAT shall be imposed on goods imported from free markets when withdrawal for consumption
inside the country.
4- The VAT shall be imposed at the rate (zero %) on the goods and services imported to projects in the
free zones and markets and that are necessary for exercising the licensed activity inside the free zones ,
cities and markets , with the exception of the limousine cars , shall be subjected to the VAT at the rate of
0%.
The goods imported from abroad at the stage of their release from
customs area shall be valued as :
1- The value of goods imported from abroad
= Value taken mainly for the customs tax +
Value of services associated with imported goods +
Customs tax + Other taxes and Charges imposed .

2-The value of goods imported from abroad and exempted from

customs tax
= Value taken mainly for the customs tax +
Value of services associated with imported goods +
Other taxes and charges imposed .
(Note :the customs tax do not including in the value )
3-The value of goods imported from abroad
and exempted partially from customs tax.
= Value taken mainly for the customs tax +
    Value of services associated with imported
goods +
   The value of the customs tax partially
exempted + Other taxes and charges imposed
Example ( 8 ):
The following are the data of one of the message imported from abroad( in July 2020)
1. Quantity imported 100 units ( TV 32 inch ),
(FOB value) per TV $ 200 ($1 = 18 L.E).
2.The Shipping cost is $ 1000 .
3. The cost of insurance is $ 1000.
4. The foreign broker's commission is $ 500.
5. The cost of loading and flooring in the port of Suez 2500 L.E.
6. The customs VAT rate of 30%.
7. Fees and other taxes 10000 L.E .
Required :
1. Determine the value added tax on this message.
2. Determine the import cost of the message and the
cost of the item .

 
Solution
(1) Determining the value subjected to VAT
360,000 FOB Value ( 100 x $ 200 x 18 L.E )
+18000 Shipping cost ($ 1000 x 18 L.E)
+18000 Insurance cost ($ 1000 × 18 L.E)
+9000 Commission ($ 500 × 18 L.E)
+2500 Costs of loading and floors in the port of Suez
----------------
406 500 Value mainly taken to impose the customs tax
121 950 Customs tax (406,500 x 30% )
10 000 Fees and other taxes
-------------
538450 value subjected to VAT ( Taxable value)
 
2) Determining the amount of value added tax :
      (Tv 32inch is not subjected to schedule tax but
subjected to VAT only).
VAT = Taxable value x VAT rate
= 538,450 × 14% = 75,383 L.E.
(3) Determine the import cost of the message and the value of the unit:
-The import cost of the message is, L.E 538,450 (not including value added tax
because it will be deducted when selling these items).
-The import cost of the unit= 538450 ÷ 100
=5384,5 L.E.
Example (9):
A firm operating in the field of import and export . The following are data about
its activities during (March 2021)
Total value of invoices of goods exported abroad
during the month 600,000 (excluding VAT).
Total value of purchase invoices during the month 380,000L.E.
There are no imports during the month.
Required : Determined the VAT payable.
 Solution
Exported goods are subjected to VAT with ( zero)% and the
registrant has the right to deduct the VAT on the input.
VAT on output = 600,000 × 0% = 0 L.E.
The VAT on input = 380,000 × 14%
= 53 200 L.E.         
VAT payable = 0 – 53 200 = -- 53 200 L.E.
A negative amount represents a credit balance able to be deducted
from the following month or months .
Example (10):
The Following are data on purchases of goods of a wholesale store during June 2020:
On 3 /6, his purchases amounted to 70,000 L.E from the Cairo factory. Goods are subjected
to VAT only.( invoice No. 641 ) .
On 5/6, his purchases amounted to 60,000 L.E from Alexandria Factory. Goods are
subjected to schedule tax rate 5% only ( Invoice No. 152 ).
  On 14/6, his purchases amounted to 80,000 L.E from Tanta factory subjected schedule
tax 8% and VAT (invoice No 815 ).
On 25 /6, his purchases amounted to 40,000 L.E from the Aswan factory, these goods are
exempted from VAT invoice No 911 .
Required:
Prepare the purchases book for value added tax purposes.
 Solution
Purchases Book
Date Supplier Reg. No Invoice No Purchasi schedule VAT Total Total
name ng tax 14% Taxes
value
3/6 Cairo - 614 70000 - 9800 9800 79800
5/6 Alx - 152 60000 3000 - 3000 63000
14/6 Tanta - 815 80000 6400 12096 18496 98496
25/6 Aswan - 911 40000 - - - 40000
                 
  Total     25000 9400 21896 31296 280400
Example (11):
The following are information about the sales of a factory producing
electrical items , during July 2020 :
On 4/7 he sold 20 gas cookers at a price of 2000 L.E per unite Abdallah
invoice No. 77.
On 7/7 he sold 15 refrigerator 12 feats at a price of 6000 L.E per unite (not
subjected to the schedule tax) to the customer Mahmoud invoice No. 78.
On 13/7 he sold 10 refrigerator 20 feats at the price of 14000 L.E per unit
(subject to the schedule tax 8% and VAT ) the customer Khaled invoice No.
79.
On 25/7 , he sold 12 automatic washing machines at 9000 L.E per unit (not
subject to schedule tax) the customer Hazem invoice N0 80.
Required :
Prepare the sales book for the purpose of value added tax.
 Answer
Sales Book

 
Customer Reg Invoice Selling VAT Total
Date schedul Total
name . No No Value 14% Value
e tax Taxes
4/7 Abdallah - 77 40000 - 5600 5600 45600
7/7 Mahmood - 78 90000 - 12600 12600 102600
13/7 Khaled - 79 140000 11200 21168 32368 172368
25/7 Hazem - 80 108000 - 15120 15120 123120
  Total     378000 11200 54488 65688 443688
 Sale of used goods and industrial waste
• The new goods purchased by the VAT payer shall be taxed when sold after being
used locally for a period of not less than two years. The value to be used as a
basis for the VAT is 30% of the value of the sale.
The following conditions are required:
1- The VAT payer should be the first one who bought the good, and this good is
new and has not been used before.
2. The VAT payer has used it locally for a period of not less than two years.
3 –The good should be sold by the registrant .
• If these conditions are not met,( the taxable value is the full sale price ).
• As for the sale of industrial waste resulting from the manufacture of a taxable
good, the law does not contain any express text of its own. However, it is
understood that, like any non-exempted good (sold), it is taxable and the selling
value in the sales invoice is the basis for the VAT .
Example ( 12 ):
The following are data on one of the firms registered (July 2020)
1. Sold Used Items for LE 100,000.
2. The entity had purchased these new items in March 2017.
3. These items were used in the same firm .
4. The firm paid VAT of 25,000 L.E. when it purchased them.
Required : Determine VAT payable.
Solution
   Since these goods are used by the firm for a period of more than two years and
were purchased new, (30% of the value of the sale only subjected to VAT). (The
VAT paid at the time of purchase shall not be deducted )
VAT payable =( Selling value × 30%) ×VAT rate.
                       = (100,000 × 30%) × 14%
                       = 30000 x 14%
                       = 4200 L.E.
Commercial discount and cash discount
1-Commercial discount
Represents a kind of reduction in the price of the sale of the goods or the services
without any conditions , to encourage sales .
This discount is decided by the seller to all customers without exception.
    Accordingly, the value of the item or service sold to customers is the net after the
commercial discount.
For example, if a good sold for 1000 L.E at discount of 15%, it will be:
Basic selling price 1000
(-) Commercial discount ( 150)
---------
    NET value 850
      Accordingly, the value to be used as a basis for VAT calculation is the net value after
deducting the commercial discount (.L.E 850 )
Note : Commercial discount must be subtracted from the basic selling price in the in voice
of sales .
2-Cash discount and quantity discount
    1- The Cash discount
Is a discount determined by the seller to the buyer and be
suspended on the terms of payment of cash during a certain period,
    2-The quantity discount
Is a discount determined by the seller to the buyer with volume
of certain purchases during a certain period to activate the sale
granted to senior customers.
Example ( 13 ):
The following are data of a ( wholesale trade) registered (during November
2020):
1. Total sales during the month L.E 254,000 .
2. Total purchases during the month LE 160,000.
3. Trade discount on sales L.E 4000.
4. VAT rate 14% on output and input.
Required :
1. Determine the deadline for submit the VAT return
2. Determine the amount of the VAT payable
 Solution
1- The deadline for submit of VAT return for the month of November
2020 is( 31/12/2020 ) (after one month).
2- Determining the amount of VAT due.
{(Total sales –trade discount ) }x VAT rate - (total purchases x VAT
rate)
={ (254,000 - 4000) × 14% } – {160,000 × 14%}
= (250,000 × 14%) - (160,000 × 14%)
= (35000 – 22400) = 13600 L.E.