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VAT claimable on vehicle bought via vehicle finance?

Posted 2 December 2015 under Tax Q&A
Georg says:
2 December 2015 at 7:58

A company bought a new vehicle for business purposes via a vehicle finance with a local banking institution. The Tax invoice was made out to the Bank however the vehicle is registered in the name of the company. Can the company claim the total Input VAT, although the invoice is not in their name? The invoice only says "delivered to" the company. This seems to be normal practice in Namibia.

Georg

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TaxTim TaxTim says:
2 December 2015 at 9:03

There are different agreements whereby a bank can finance a vehicle.

Installment sale and suspensive sale agreements

With the original acquisition of goods to be financed by the Bank, the Bank will claim input tax charged by the motor dealer.

As the Bank is registered for VAT purposes, the is required to charge output VAT on its taxable supplies, and hence required to issue a tax invoice to clients for the supplies rendered. The Bank agreement is issued as a tax invoice and should thus comply with the requirements of a tax invoice in terms of the VAT Act.

Financial lease agreements

All aspects are the same as per above, except the ownership of the goods in a finance lease agreement is with the Bank during the duration of the agreement thus not VAT implications. The client will not claim any input tax as the bank will not charge any output tax.

Only if the asset is sold to the client at the end of the agreement, VAT will be applicable on the selling price. A tax invoice will have to be issued to the client in these cases.


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