Tax Law
A real estate developer has purchased a brand-new commercial building, a 2-year-old commercial building, a 10-year-old commercial building, and a residential property.
On which of these purchases will the developer be required to pay VAT?
A real estate developer has purchased a brand-new commercial building, a 2-year-old commercial building, a 10-year-old commercial building, and a residential property.
On which of these purchases will the developer be required to pay VAT?
Only the brand-new and two-year-old commercial buildings.
(C) Commercial buildings that are less than three years old are considered a standard-rated supply. This means that a VAT of 20% will be added to the purchase cost. On the other hand, commercial buildings that are more than three years old (with no option to tax), as well as residential properties, are exempt supplies.
Therefore, no VAT will be added to the purchase cost.
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