Peculiarities Of Accounting For Value Added Tax

Value added tax (VAT) – important indirect tax to the state is a form of tax collection that is assessed incrementally on each stage of production, sale of goods and provision of services. VAT taxpayer is either a physical person or a legal entity and the registration as a VAT taxpayer is either mandatory or voluntary. VAT is an indirect multi-stage tax, payable on each stage of production, sale of goods and provision of services, represents one of the most prominent components in the formation of Georgia's state budget. VAT taxable base is determined based on compensation received or compensation to be received by VAT taxpayer. Tax period for VAT purposes is deemed to be the time of supply of goods or provision of services, but no later than receiving full or partial compensation for the supply of goods or provision of services, in case the payment is made before the goods are supplied or services are rendered. If full or partial payment is made before the supply of goods, the compensation that has been received is subject to VAT at the time of receiving such compensation. The amount of such comensation paid is the taxable base of VAT, as long as all the other Georgian Tax Code requirements are met at the time of receiving such compensation. During the recent period, important amendments have been made to the Georgian Tax Code in terms of VAT, several paramenters related to VAT have either been changed or clarified, which require pertinent representations for accounting and declaration purposes of input and output VAT.