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Those responsible for VAT who purchase goods and/or services subject to VAT have the right to deduct (recover) the VAT incurred provided they comply with the legal requirements summarised below.

Substantive requirements: These requirements relate to the income-generating activity of the responsible party. They include proving the cause-and-effect relationship, the necessity of the expense, the proportionality of the expense (ie that it has a value in line with market prices for similar operations), and the timing for requesting the deduction.

VAT can be deducted (recovered) in the two-month period of acquisition or in one of the three bi-monthly periods immediately following.

In terms of the requirement relating to the income-generating activity of the business, the following applies:

1. Ìý

   •ÌýÌýÌýÌý If the cost and/or expense is directly attributable to a taxed or exempt operation, the VAT incurred