Registration is one of the integral parts of the VAT system. According to article 7(1)(a) of the VAT proclamation registered persons are identified as the first
Yosef Alemu Gebreegziabher
Registration is one of the integral parts of the VAT system. According to article 7(1)(a) of the VAT proclamation registered persons are identified as the first groups of taxpayers. Even though registered person are identified as taxpayers they are not required to pay tax, rather they are only required to collect tax from their customers. The VAT proclamation has introduced two types of registration. Those taxpayers in the first group are duty bound to register and failure to registrar shall result in penalties. On the contrary in case of those taxpayers who fall in the second category they are not by law required to register for VAT but they are given an opportunity to apply for voluntary registration when they satisfy certain requirements.
Registration entails benefits and duties on the taxpayer. One of the main benefits of registration is the benefit of crediting. As provided in article 21 of the tax proclamation registered persons are given the right to claim tax credit for the taxes paid on their purchases. On the other hand registered persons are required to collect VAT from their customers, file a VAT return every month, keep books and accounts and issue VAT invoices to their customers during sale.