In what circumstance can input VAT be reclaimed?

Input VAT can be reclaimed when a business is VAT registered and meets the requirements set out by tax authorities. This is because only VAT registered businesses can recover the VAT they have paid on purchases, provided those purchases are used for making taxable supplies. The reclaiming process allows businesses to offset the VAT they have incurred against the VAT they collect from customers on their own sales, thus ensuring they do not bear the cost of VAT incurred in the course of their operations.

For a business to reclaim input VAT, it must adhere to specific conditions, such as maintaining accurate records and ensuring that the goods or services purchased are used for business activities that are taxable. This input tax deduction is fundamental to the VAT system, ensuring that VAT is effectively a tax on the value added at each stage of production and distribution.

In contrast, if a business is not registered for VAT, it is ineligible to reclaim input VAT regardless of the situation, since claiming VAT is a privilege granted by being part of the VAT system. Additionally, the option regarding imported goods does allow businesses to reclaim import VAT, but only if they are VAT registered and meet the other conditions. Therefore, the specific emphasis on being VAT registered and meeting the requirements accurately captures the core principle behind reclaiming input VAT.