Problem: You have recently received a letter from the managing director of a newly-created business (which will make no exempt supplies and will have no dealings outside Mauritius) requesting your help with matters concerning Value Added Tax (VAT). The following is extract from the letter:
a) We understand that some businesses are registered for VAT whilst others are not registered. We have only recently commenced trading and consider that it will take us about five years to reach full potential sales, which we envisage from Rs 1 m to Rs 50 m in that period. Could you please advise us of the position regarding registration?
b) Once we are registered, how should the VAT content of our income and expenditure be reflected in our budgets and final accounts at the year end?
c) When and how is VAT to be accounted for to Mauritius Revenue Authority (MRA) and what is the position if we should pay out more VAT than we charge?
d) What records should be kept by us in order to satisfy the VAT Act?
Make a letter in response to the above requests.