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Charging VAT on the Transfer of a Business is bad for trade and investment

Changes in business ownership will usually take one of two forms. One could sell the shares in a company together with its underlying assets and liabilities or simply sell the underlying assets and liabilities.

There are many commercial and legal reasons that inform why a potential investor would opt to purchase the shares of a company instead of the underlying assets and liabilities or vice-versa. One of the reasons could be the tax impact each option would have.

The transfer of shares is exempt from VAT whereas the transfer of the underlying assets and liabilities of a company is subject to VAT at the standard rate of 16 percent.

Source: www.businessdailyafrica.com

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