Can we capitalize Tax amounts?

According to IAS 16 the purchase price of the asset includes the amount of non-refundable taxes i.e. such taxes which cannot be claimed back are capitalized and are included in the cost of the asset at the time of purchase. For example, when the asset is purchased or imported then buyer/importer is required to pay different duties and taxes. Some of these taxes can be “claimed back” against other taxes or similar taxes payable to government like sales tax where tax paid at the time asset is purchased can be deducted from the sales payable on goods sold by the entity. These kind of taxes are NOT included in the cost of the asset. All other duties and taxes which cannot be offset or claimed for deduction or refund will be capitalized as cost of the asset at the time of purchase.

Same goes for parts that are installed to upgrade asset’s overall useful life or productivity then any tax paid on such parts to the extent they are not refundable are capitalized and form part of the carrying amount of the asset.