How is the monthly installment calculated for the annual accounting scheme?

The calculation of the monthly installment for the annual accounting scheme is determined based on a simplified approach that allows VAT-registered businesses to make manageable payments throughout the year. The correct method to calculate the monthly installment is to take 1/10th of last year's VAT liability. This approach spreads the financial obligation evenly across the year, aligning monthly payments with the annual VAT liability.

Taking 1/10th ensures that businesses are not overpaying or underpaying throughout the year, as it provides a predictable and budget-friendly way to manage VAT payments. Annual accounting schemes are designed to reduce the administrative burden on businesses, and this installment calculation method is a key part of that facilitation.

This rationale is specifically applied to those who are part of the annual accounting scheme, as it reflects a calculated strategy to balance cash flow while staying compliant with VAT obligations. The options representing 1/5th, 1/12th, and 1/15th of last year's VAT liability do not conform to the established guidelines for this scheme, which stipulate that the monthly installment is based on 1/10th.