Sales tax and VAT
Sales tax is a tax charged on taxable supplies under applicable rules, normally collected from customers for the tax authority. A registered seller records output tax on taxable sales and, where permitted, claims input tax on purchases. The amount due to the authority is generally output tax less recoverable input tax. A net receivable can arise if recoverable input tax exceeds output tax.
Worked example
A 100 sale plus 20 tax creates a 120 receivable and 20 output tax.
Common mistake
For a registered business recoverable input tax is normally offset against output tax; laws differ.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | F1 | Direct | July 2027–August 2028 |
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | K1 | Direct | July 2027–August 2028 |
| CIMA | BA3 | Direct | Official assessment-window verification pending |
| FIA | FFA | Direct | September 2026–June 2027 |
Related terms
Also called: Sales tax, VAT, Value added tax