The Grounds of the Right to Credit VAT
The starting point of VAT diagnostics is the right of credit: where goods or services are intended or used for a VAT-taxable operation, the taxable person may credit the VAT paid or payable on purchase from another taxable person, the VAT payable on operations treated as supply, the VAT paid on import, and the VAT assessed under reverse charge. In addition, the VAT connected with expenses is credited where the goods or services are used for the provision of services outside the territory of Georgia, in operations exempt with the right of credit, or in defined financial services. The basis for receiving credit is a document: a tax invoice, an import declaration, or, on reverse charge, the amount reflected in the VAT declaration; in defined cases the basis is also a purchase-confirmation document of the buyer, in which the amount paid — including the VAT — must be indicated. Diagnostics is precisely the verification of these three elements — destination, document and period.