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How to correct commission based sales in the book that is recorded as turnover to reduce VAT liability? see details below.

As an Accountant, how do you treat this situation to protect your company from paying what is not to be paid as tax to the government?H

A company is buying commodity locally on behalf of another company that gives advance based on the current price market with a slight addition as commission/profit for the company buying locally directly (the reason for this is that the company that is buying is having facilities(manpower, storage and plant) in the region where the commodity is being procured, while the company that is giving advance is new in the business and does not have the facility to be able to buy the commodities directly from that region where the commodity is available) but the company buying locally records in their book the entry as turnover where as the funds comes from another company out there and they make less than9% as profit or in form of commission on the transaction. Here comes the issue, the government tax auditor will consider this as turnover as presented by the buying company's book of account, although agric commodities export is zero VAT but when sold locally, it is VATable with5% VAT. Now how will the company buying on behalf of the other deal with this (present its book) so as to avoid paying VAT of5% on transaction that he got little profit from?

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Question added by Ibrahim Adewale Ige , Admin Manager/Document Controller , HIGH TRADE CONCEPT RESOURCES LTD
Date Posted: 2015/04/14
Menerva Melad
by Menerva Melad , Account Executive, Key Accounts , Graphic Home Company

I really agree with you for all answers

Deleted user
by Deleted user

agreed with all ..................................

Salah Othman Yousef Alshambaati
by Salah Othman Yousef Alshambaati , مدير ادارة الحسابات , شركة انفال الجديدة للتجارة والمقاولات

Agreed with the answers Mr. Ayman Mohammed Atef

ايمن محمد عاطف محمد
by ايمن محمد عاطف محمد , Director of the control and regulation unit , ACOLID

Please clarify the question specifically in order to clarify the answer according to data

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