Amortisation method

Tax Glossary Definition

Amortisation method

Amortisation Method – A VAT mechanism that permits businesses to recover input tax on long-term capital or investment goods over several years, corresponding to their useful life. Also called the Capital Goods Scheme or Capital Goods Adjustment, it ensures that input tax credits are distributed evenly across the period during which the asset is used.

Example: If machinery has a useful life of five years, the VAT paid on its purchase is claimed in parts over those five years rather than all at once.

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