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Consumption Tax

Consumption Tax Obligations

Record Keeping

When you registered for CT, you must keep sufficient records, so that you can readily determine your CT liability.

  • Such records may include:

  • Cash Book

  • Bank statements

  • Invoices

  • CT invoices

  • CT Credit and CT Debit notes

  • Till tapes

  • Stock records

  • Motor vehicle log books

  •  Accounting instruction manuals

  •  Any other documents that verify transactions or entries in any books of account

These records must be kept in the:                         

  • English or Tongan languages

  • Kingdom of Tonga for 5 years after the end of the CT tax period to which they relate or longer if you have a CT credit that you have not claimed a refund for

Proper Consumption Tax Invoice

CT registered businesses must issue the proper CT invoice to its customers and demand proper CT invoice from suppliers.

Proper CT invoice must have:

  • the words E28098 Consumption Tax Invoice E2099 in a prominent place

  • name of business, address, taxpayer identification number (TIN)

  • customer E28099s name, address and taxpayer identification number (TIN)

  • individualized serial number of the invoice

  • the date on which the CT invoice is issued

  • a description of the goods or services supplied (including quantity or volume)

  • the price and the amount of CT charged.

CT tax credit note

CT credit note must issue by the CT registered person if, the sale amount is reduced and the supplier has charged and collected too much CT from his customer.

The supplier has to calculate the difference between the CT payable on the lower final sale price and the original price. This difference should be accounted for as an input tax (supplier) for the period in which the credit is made. Whereas the buyer must include the amount of the difference as output tax in the CT period the adjustment was made because he already have claimed an input tax credit for the overpaid CT.

The supplier must issue a CT Credit Note showing the difference between the original CT paid and the correct CT payable for the transaction.

CT Credit note must have the following particulars:

  • the words E28098Consumption Tax Credit Note E28099 in a prominent place

  • the name, address and TIN of the supplier

  • the name, address and TIN of the customer

  • the individualized serial number

  • the date on which the credit note is issued

  • a brief description of why the credit note is being issued, including sufficient information to identify the supply to which the credit note relates, the consideration shown on the CT invoice for the sale, the correct amount of the sale price, the difference between these two amounts  and the

  • amount of CT that relates to the difference.

CT tax debit Note

In circumstances where after a sale, the supplier adjusts the original sale price to a higher sale price, the supplier would have undercharged the CT payable by the customer.

The supplier has to calculate the difference between the CT payable on the higher final sale price and the original price. This difference should be accounted for as an output tax for the period in which the adjustment is made (supplier), whereas the buyer will be entitled to claim the amout of the difference as an input tax credit in the CT period the adjustment was made.

CT Debit note must have the following particulars:

  • the words E28098 Consumption Tax Debit Note E28099 in a prominent place

  • the name, address and TIN of the supplier

  • the name, address and TIN of the customer

  • the individualized serial number

  • the date on which the debit note is issued

  • a brief description of why the debit note is being issued, incluing sufficient information to identify the supply to which the debit note relates, the consideration shown on the CT invoice for the sale, the corect amount of the sale price, the difference between these two amounts and the

  • amount of CT that relates to the difference.

Accounting for CT

Every registered person is required to account for CT on an  E28098 Invoice Method E28099 generally means that in relation to supplies made, the registered person accounts for CT in the earliest taxable person in which you:

  • issue or receive an invoice

  • receive or make a payment.

What is a CT Period?

A CT period is the period of time for accounting for CT. CT periods are periods of one calendar month.