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Deemed Supply

Updated: Nov 25, 2022

Deemed Supply

What is a Deemed Supply? Usually the supplier buys the goods recovers input tax on the purchase, and later accounts for the output VAT when providing the goods to the customer, and the customer pays consideration in return. 

But what if there is no consideration?

Let’s suppose we have a supplier who has recovered input tax on some goods, which are then given to the customer for free. The customer has the goods, but no one has paid VAT on them as the supplier already recovered the VAT. 

Goods or services that are bought for business purposes but are later used for private use, or used as gifts or samples, are known as deemed supplies. 

Examples of deemed supplies are

Gifts or samples Personal use of business resources Goods held at the time of de-registration

Exceptions: 1. If no Input Tax was recovered for the related Goods and Services.

2. If the supply is an Exempt Supply.

3. If the recovered Input Tax has been adjusted for the Goods and Services pursuant to the Capital Assets Scheme.

4. If the value of the supply of the Goods, for each Recipient of Goods within a 12-month period, does not exceed the amount specified in the Executive Regulation of this Decree-Law, and the Goods were supplied as samples or commercial gifts.

5. If the total Output Tax due for all the Deemed Supplies per Person for a 12-month period is less than the amount specified in the Executive Regulation of this Decree-Law.


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