VAT or Value Added Tax was introduced in the Gambia on the 1st January 2013 following the approval of the Gambia Income and Value Added Tax Act, 2012 by the National Assembly on 27th June 2012.
Value Added Tax is charged on both imports and domestic transactions as it used to be under the then sales tax system. It is important to note that this initiative is also part of Gambia’s commitment towards the ECOWAS protocol for the introduction of Value Added Tax in all the member countries.
What is Value Added Tax – VAT ?
It is an indirect tax levied on the supply of certain goods and services in the Gambia. It is collected by a registered persons at points of sale and delivery of services, and by Customs for the import of goods into The Gambia. It is proportional to the price charged for the goods and services, and charged at each stage of the production and distribution process. Registered businesses are able to recover most of the input VAT they have paid out on purchases and expenses.
Being one of the latest tax in the country, you may be interested to know few elements of VAT system in the Gambia.
1. There is no VAT burden on exports and exporters can claim VAT input tax deductions.
2. For Value Added Tax purposes the supply of goods and services are called “supplies”. Almost everyone has to pay the VAT on purchases of taxable supplies of goods, taxable services and taxable imports.
3. Although the final consumer pays the tax, businesses are generally responsible for collecting and remitting it to GRA. These businesses are called VAT registrants or a registered person.
4. Small businesses are exempted from registration and do not charge VAT on their sales, but must pay it if their purchases are from a VAT register supplier. Please read point 16 below for compulsory registration limit.
5. A registered person shall provide a Value added tax return for each tax period within 15 days after the end of the period, whether or not tax is payable for the tax period. Tax period for VAT purpose is monthly.
6. The Net Value Added Tax payable for a period is the differences between the Output and Input VAT credit allowed to the business for the period.
7. Output VAT is the tax the business billed on the good or services supplied whiles Input VAT is the tax the business was billed on the purchases and expenses.
8. The registrants pay the VAT on most purchases they make to operate their businesses, then claim an Input Tax Credit to recover the VAT they have paid out on the purchases they use in their commercial activities.
9. All registered business must issue a VAT invoice at the time of the supply of good or service. The invoice must clearly indicate the term “VAT Invoice” with address and tax identification number (TIN)
10. Taxable Good – This is the supply of any goods sold by a registered person carrying on business within The Gambia, other than goods that are specified as being exempt. In some cases it will apply to non-residents who deliver goods to The Gambia, and non- residents who install or assemble goods sold in The Gambia.
11. Taxable Services – refers to a supply of services in The Gambia by a registered person in connection with the carrying on of a business, other than an exempt supply. A non-resident who is supplying taxable services within The Gambia will also be required to register.
12. Taxable imports – Customs duties and other import taxes are included in the tax base for VAT on imports because they form part of the consumption cost in respect of the goods imported.
13. An import of goods that is exempt from customs duties under the specified provisions of the customs laws is also an exempt import for VAT purposes.
14. For consumers and others entities not registered for Value added tax, the VAT on imports will be a final tax. However, as with Value added tax on domestic purchases, a registered business that imports goods will generally be allowed an input tax credit for the VAT paid on importation.
15. Time of Supply – Supply of good or service occurs the earliest of invoice issue date, date of part or full payment and the date of good or service delivery.
16. VAT Rates – The standard rate of valued added tax is 15% on all taxable supplies made in The Gambia and on imports. Exports are taxed at 0% as the tax is “destination based”, meaning only goods and services consumed within The Gambia are taxable.
17. Registration – Every person (individual or other type of business entity) with a turnover of taxable goods and services totaling D1,000,000 or greater in any consecutive period of twelve months must register with Gambia Revenue Authority (GRA) for value added tax purpose.
18. A business with taxable supplies totaling D500,000 turnover and above can apply for voluntary registration. A business may wish to take advantage of the voluntary registration option if they makes supplies to other registered persons, or if the person is an exporter.
19. A person may apply for cancellation of registration within 30 days of ceasing to make taxable supplies and if their taxable supplies for the past 12 months have been less than D500,000.
Value added tax is a tax on spending. The tax is borne by the final consumer of goods and services because it is included in the price paid. However, you should note that some items are exempted from VAT in the Gambia.
There are many other types of taxes in the Gambia which business managers should know and If you require more details about VAT or any other Gambia Tax, you may contact the nearest GRA Office