Reimbursement expense liable VAT & NBT?

asked Mar 31, 2018 in VAT by Chathuranga (800 points)
reshown Mar 31, 2018 by Chathuranga
I need to know that if the parent company paid any expenses (VAT & NBT included tax invoice)  on behalf of the subsidiary company. Then the parent company  submit a separate reimbursement bill to the subsidiary. Then that inter company transaction liable for VAT & NBT? (Both companies liable VAT & NBT).

Eg:- Parent company paid its subsidiary company telephone bill and later parent company submitted a invoice to reimbursement that expense.

1 Answer

+1 vote
answered Mar 31, 2018 by Visio (4,530 points)
In any case, if you "INVOICE" then you need to include VAT.  But there is no need to invoice if you are asking for a reimbursement. Reimbursement can just be a request letter along with the original invoices so that the subsidiary can claim the VAT.

The only issue is where the original invoice is raised in favor of the parent in which case subsidiary will not be able to claim the VAT portion.
commented Mar 31, 2018 by Chathuranga (800 points)
Thank you  Sahan321 your reply. In my situation invoice include subsidiary name and TIN number.
commented Mar 31, 2018 by Chathuranga (800 points)
In my situation our parent company sends their tax invoice (parent company) with the reimbursed tax invoice? So is it an incorrect?
commented Apr 1, 2018 by Visio (4,530 points)
This is not incorrect. If your parent company considers it as a service that goes into its revenue, then it should be the case.  But in your case from the group point of view, you pay VAT twice for the same ultimate service. But if you consider it as a simple reimbursement, there is no need to raise an Invoice.