Section 8: Deductions

Article 27: The right to deduct

The right to deduct is the right given to a taxable person to deduct from the tax due on a certain transaction the value of the tax paid in respect of the cost of this transaction or any of the components forming part of the cost.

The taxable person is entitled to deduct from the tax he is liable to pay for a specific period, the whole deductible tax for that same period.

The right of deduction arises when the deductible tax is due.

Article 28: The deductible tax

The deductible tax is the tax that is charged in respect of goods and services purchased by a taxable person from another taxable person, and goods imported by a taxable person, in order to perform through his economic activity, one of the following transactions:

1. The supply of taxable goods and services.

2. The transactions related to exportation and like transactions, and international transport pursuant to articles 19, 20 and 21 of this law.

The tax charged on electricity, water, telecommunications consumed by a taxable person, is not eligible for deduction.

The tax charged on the fixed assets acquired by a taxable person at an earlier date of being taxable shall also be eligible for deduction where these assets are used for taxable transactions.

The fixed assets shall mean tangible property, such as machines and tools, dedicated for a permanent use in the business as investment means.

The rules and procedures of implementation of this article are to be regulated by a decree upon the proposal of the Minister of Finance.

Article 29: Rules governing the right to deduct

A taxable person has the right to deduct provided that he hold a tax invoice drawn up in accordance with article 38 of this law, or a substitute document, or an import document established by the competent authorities.

Article 30: The excess of deductible tax

If, at the end of a tax period, the amount of the deductible tax exceeds the amount of the tax due, then the excess shall be carried forward to the following period.

The taxable person has the right to claim, at the end of any calendar year, a refund for the excess of the input deductible tax covering this year.

The exporters have the right to claim, at the end of any tax period, a refund of the excess deductible tax covering this period. 

As for the taxable person who ceased to be taxable, he has the right to claim a refund of the excess of the input deductible tax after the administration has approved his deregistration.

The administration shall resolve the refund claim within three months starting from the date of receipt of the request.

In case the administration approved, partly or wholly, the refund claim, it shall pay the due amount to the taxable person, otherwise an interest of 9% is due on the unpaid amount starting the end of the 4th month from the date the claim was submitted.

Article 31: The right to deduct partially

If the taxable person, by way of supplying goods and services, performs transactions in respect of which tax is deductible, and others in respect of which tax is not deductible, he is entitled to deduct such part of the tax attributable to the former transactions.

Article 32: Adjustments of deductions

The initial deductions shall be adjusted where that deduction was higher or lower than that to which the taxable person was entitled to initially deduct due to:

1. Material mistakes;

2. Change occurs in the factors used to determine the amount to be deducted at a later date of the tax period. 

The person who opt to be a taxable person and deregisters within 2 years from his registration date, shall return to the treasury the difference, if it exists, between the refunded tax and the tax collected for the treasury, for the period during which he was a taxable person.