VAA is a system based solution that detects inconsistencies between purchase and sales invoices that have been declared in the VAT returns filed in iTax. The system communicates the inconsistencies to both the buyer and the seller and automatically disallows input taxes on invoices that remain unresolved after a given period of time.
An inconsistency is raised when either of the following invoice details between the seller’s and buyer’s returns do not match:
- Invoice number
- Date of supply,
- Supplier/purchaser PIN,
- Transaction amount
How VAA works
- The iTax system uses the buyer invoice declarations as a baseline against which it searches for each corresponding sale declaration based on the details provided by the buyer. To ensure compliance with the 6-month rule as outlined in Section 17 of the VAT Act, 2013, the system searches through a series of the sellers’ VAT returns before qualifying inconsistencies.
- If any inconsistencies are noted between the buyer and sellers’ declarations, the system generates a detailed inconsistency report and sends a copy to both the buyer’s and the seller’s emails as provided in iTax.
- In such event, the buyer and/or the seller are expected to amend the respective VAT returns to reflect the true position of the supply invoice (PIN, Invoice number, date and amount) in their VAT returns within a stated period.
- Upon the lapse of the period, another report will be generated based on the amended returns. An email with a report of outstanding inconsistencies will then be sent to both the buyer and seller.
- Any inconsistencies must thereafter be addressed within given timelines failure to which unresolved VAT inputs will be disallowed.