Under VAT rules, what does VAT exempt imply about registration and input tax?

Under VAT rules, what does VAT exempt imply about registration and input tax?

• A. You are required to register for VAT purposes
• B. You do not register for VAT purposes
• C. You must register for VAT and reclaim input tax
• D. You can choose registration status freely

Answer: (B)

VAT exempt means the goods or services you provide are not subject to VAT. Because you’re dealing with exempt supplies, you’re outside the VAT registration regime, so you do not register for VAT purposes. And since the ability to reclaim input tax is confined to those who are registered for VAT, you would not reclaim input tax on your purchases.

VAT exempt means the goods or services you provide are not subject to VAT. Because you’re dealing with exempt supplies, you’re outside the VAT registration regime, so you do not register for VAT purposes. And since the ability to reclaim input tax is confined to those who are registered for VAT, you would not reclaim input tax on your purchases.