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Claim Vat on second-hand goods


All accountants and tax practitioners will most likely tell you that you can’t claim VAT that you incur on your business purchases without a valid tax invoice.

They will also emphasise on the particulars that a valid tax invoice should contain and eventually, you end up believing the concept that no business can claim VAT if it does not have tax invoices. I am fully aware that the section in the VAT Act (Act) allowing VAT claims emphasises the need for the business to have a valid tax invoice but I want to share some insights into instances where a VAT-registered business may still claim VAT without tax invoices. I wouldn’t blame you if this surprises you; I was also groomed to believe that VAT cannot be claimed without a tax invoice. Throughout this article, words importing the masculine shall be deemed to include the feminine.


The Act allows VAT-registered persons to claim VAT that they incur on purchases of second-hand goods from non-VAT registrants. Such VAT is alternatively called notional VAT, i.e. no VAT is charged but the VAT-registrant is deemed to have incurred it. The Act defines second-hand goods as tangible items which were previously owned and used by another person but excluding animals. Further, the term second-hand goods includes movables such as cars as well as immovable property such as land and buildings. Therefore, the two conditions of previous ownership and usage must be fulfilled.

The following issues need to be considered when claiming VAT on second-hand goods:

Supplier should be non-VAT registrant: In almost all the cases where VAT on second-hand goods is claimed, the supplier would not be a VAT-registrant. This is so as the Act requires that such VAT be claimed in cases where VAT was not charged by the seller. The seller can be an individual or a company but the critical thing is that he shouldn’t be registered for VAT. However, the Act also acknowledges that if a VAT-registrant is denied input tax on acquisition of something, they should not charge VAT on disposal.

Therefore, it can happen that the supplier of the second-hand goods will be registered for VAT but they may not charge the tax as they wouldn’t have claimed VAT on acquisition. This usually applies to the acquisition and subsequent sale of passenger vehicles. Payment should be made: This VAT is claimable to the extent that payment would have been made to the supplier. In other words, if no payment is made, then there cannot be any notional VAT claim.

No need for tax invoice: Under ordinary circumstances, a purchase on which VAT is claimable should have been from a VAT-registered person, who would usually issue a tax invoice. A VAT-registrant who acquires second-hand goods only needs to keep the following details: name, address and ID of supplier, description of goods and the price charged. This could be in any form, e.g. an email print-out or a contract, invoice, receipt or just a scribbled piece of paper.

Use tax fraction: The VAT on second-hand goods is claimed by applying the tax fraction to the price of the second-hand goods. For example, VAT on a lorry which cost P 224 000 would be P 24 000, being 12%/112% x P 224 000. Transfer duty limit: For immovable property, the VAT on second-hand goods can be claimed only up to a maximum of the transfer duty paid to the Registrar of Deeds. In other words, the VAT-registrant applies the tax fraction to the price of the immovable property but limits the VAT claim to the transfer duty actually paid. 

Don’t export: If the second-hand goods on which notional VAT claim is made are later exported, then the VAT initially claimed must be paid to BURS. Further, if such second-hand vehicle is later sold at a loss within 12months, BURS requires that any tax differential be paid to it. For example, if the lorry stated above (notional VAT claim of P 24 000) is later sold within say 8 months from date of purchase and VAT of P 20 000 is charged, BURS requires that the VAT-registrant pays it P 4 000, which represents the VAT on the loss made (P 24 000 less P 20 000).


This VAT can be claimed by any VAT-registrant, depending on their business. For example, any other VAT registrant who doesn’t deal in vehicles can only claim VAT on commercial vehicles as VAT on passenger vehicles is prohibited. On the other hand, dealers in vehicles can claim notional VAT incurred on the purchase of both passenger and commercial vehicles. Lastly, VAT on immovables can be claimed by any VAT-registrant provided that such person will use the property in the advancement of a business on which they charge VAT.

Well folks, I hope that was insightful. As Yours Truly says goodbye, remember to pay to Caesar what belongs to him. If you want to join our Tax Whatsapp group, send me a text on the cell number below. Jonathan Hore writes on behalf of Aupracon Tax Specialists and feedback can be relayed to or 7181 5836. This article is of a general nature and is not meant to address particular matters of any person.

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Export Processing Zones: How to Get SEZA to Sizzle

23rd September 2020
Export Processing Zone (EPZ) factory in Kenya

In 2005, the Business & Economic Advisory Council (BEAC) pitched the idea of the establishment of Special Economic Zones (SEZs) to the Mogae Administration.

It took five years before the SEZ policy was formulated, another five years before the relevant law was enacted, and a full three years before the Special Economic Zones Authority (SEZA) became operational.

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Egypt Bagged Again

23rd September 2020

… courtesy of infiltration stratagem by Jehovah-Enlil’s clan

With the passing of Joshua’s generation, General Atiku, the promised peace and prosperity of a land flowing with milk and honey disappeared, giving way to chaos and confusion.

Maybe Joshua himself was to blame for this shambolic state of affairs. He had failed to mentor a successor in the manner Moses had mentored him. He had left the nation without a central government or a human head of state but as a confederacy of twelve independent tribes without any unifying force except their Anunnaki gods.

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23rd September 2020

If I say the word ‘robot’ to you,  I can guess what would immediately spring to mind –  a cute little Android or animal-like creature with human or pet animal characteristics and a ‘heart’, that is to say to say a battery, of gold, the sort we’ve all seen in various movies and  tv shows.  Think R2D2 or 3CPO in Star Wars, Wall-E in the movie of the same name,  Sonny in I Robot, loveable rogue Bender in Futurama,  Johnny 5 in Short Circuit…

Of course there are the evil ones too, the sort that want to rise up and eliminate us  inferior humans – Roy Batty in Blade Runner, Schwarzenegger’s T-800 in The Terminator,  Box in Logan’s Run,  Police robots in Elysium and  Otomo in Robocop.

And that’s to name but a few.  As a general rule of thumb, the closer the robot is to human form, the more dangerous it is and of course the ultimate threat in any Sci-Fi movie is that the robots will turn the tables and become the masters, not the mechanical slaves.  And whilst we are in reality a long way from robotic domination, there are an increasing number of examples of  robotics in the workplace.

ROBOT BLOODHOUNDS Sometimes by the time that one of us smells something the damage has already begun – the smell of burning rubber or even worse, the smell of deadly gas. Thank goodness for a robot capable of quickly detecting and analyzing a smell from our very own footprint.

A*Library Bot The A*Star (Singapore) developed library bot which when books are equipped with RFID location chips, can scan shelves quickly seeking out-of-place titles.  It manoeuvres with ease around corners, enhances the sorting and searching of books, and can self-navigate the library facility during non-open hours.

DRUG-COMPOUNDING ROBOT Automated medicine distribution system, connected to the hospital prescription system. It’s goal? To manipulate a large variety of objects (i.e.: drug vials, syringes, and IV bags) normally used in the manual process of drugs compounding to facilitate stronger standardisation, create higher levels of patient safety, and lower the risk of hospital staff exposed to toxic substances.

AUTOMOTIVE INDUSTRY ROBOTS Applications include screw-driving, assembling, painting, trimming/cutting, pouring hazardous substances, labelling, welding, handling, quality control applications as well as tasks that require extreme precision,

AGRICULTURAL ROBOTS Ecrobotix, a Swiss technology firm has a solar-controlled ‘bot that not only can identify weeds but thereafter can treat them. Naio Technologies based in southwestern France has developed a robot with the ability to weed, hoe, and assist during harvesting. Energid Technologies has developed a citrus picking system that retrieves one piece of fruit every 2-3 seconds and Spain-based Agrobot has taken the treachery out of strawberry picking. Meanwhile, Blue River Technology has developed the LettuceBot2 that attaches itself to a tractor to thin out lettuce fields as well as prevent herbicide-resistant weeds. And that’s only scratching the finely-tilled soil.

INDUSTRIAL FLOOR SCRUBBERS The Global Automatic Floor Scrubber Machine boasts a 1.6HP motor that offers 113″ water lift, 180 RPM and a coverage rate of 17,000 sq. ft. per hour

These examples all come from the aptly-named site    because while these functions are labour-saving and ripe for automation, the increasing use of artificial intelligence in the workplace will undoubtedly lead to increasing reliance on machines and a resulting swathe of human redundancies in a broad spectrum of industries and services.

This process has been greatly boosted by the global pandemic due to a combination of a workforce on furlough, whether by decree or by choice, and the obvious advantages of using virus-free machines – I don’t think computer viruses count!  For example, it was suggested recently that their use might have a beneficial effect in care homes for the elderly, solving short staffing issues and cheering up the old folks with the novelty of having their tea, coffee and medicines delivered by glorified model cars.  It’s a theory, at any rate.

Already, customers at the South-Korean  fast-food chain No Brand Burger can avoid any interaction with a human server during the pandemic.  The chain is using robots to take orders, prepare food and bring meals out to diners.  Customers order and pay via touchscreen, then their request is sent to the kitchen where a cooking machine heats up the buns and patties. When it’s ready, a robot ‘waiter’ brings out their takeout bag.   

‘This is the first time I’ve actually seen such robots, so they are really amazing and fun,’ Shin Hyun Soo, an office worker at No Brand in Seoul for the first time, told the AP. 

Human workers add toppings to the burgers and wrap them up in takeout bags before passing them over to yellow-and-black serving robots, which have been compared to Minions. 

Also in Korea, the Italian restaurant chain Mad for Garlic is using serving robots even for sit-down customers. Using 3D space mapping and other technology, the electronic ‘waiter,’ known as Aglio Kim, navigates between tables with up to five orders.  Mad for Garlic manager Lee Young-ho said kids especially like the robots, which can carry up to 66lbs in their trays.

These catering robots look nothing like their human counterparts – in fact they are nothing more than glorified food trolleys so using our thumb rule from the movies, mankind is safe from imminent takeover but clearly  Korean hospitality sector workers’ jobs are not.

And right there is the dichotomy – replacement by stealth.  Remote-controlled robotic waiters and waitresses don’t need to be paid, they don’t go on strike and they don’t spread disease so it’s a sure bet their army is already on the march.

But there may be more redundancies on the way as well.  Have you noticed how AI designers have an inability to use words of more than one syllable?  So ‘robot’ has become ‘bot’ and ‘android’ simply ‘droid?  Well, guys, if you continue to build machines ultimately smarter than yourselves you ‘rons  may find yourself surplus to requirements too – that’s ‘moron’ to us polysyllabic humans”!

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