7.4.2 Case 2

A supplier of flour offers his customers (bakers) the opportunity to collect ‘points’. The bakers can redeem the points at the supplier for goods which are likely to be used for private purposes by the bakers (bicycles, DVD players, TVs, home cinema sets, etc.). Flour is subject to 6% VAT; all the goods for which the points can be redeemed are subject to 19% VAT.

See case 1, however when a gift is taken by the baker for private use, the supplier makes a deemed supply. The taxable base is the cost price of the gift, which is equal to the value of the ‘discount in kind’ awarded by the supplier.

As above in 1. There would be no issue of a tax certificate, however, in these circumstances and no possibility for the recipient of the business gift to recover input tax on the gift.

As above in case 1.

As above in case 1.