VAT Refund Cases: A Guide to the Value Added Tax Law

Value Added Tax (VAT) tops the list of tax revenues, accounting for the largest share of tax collections. Consequently, VAT refund operations are part of investment incentives, where the government has granted incentives for refunding the VAT paid to improve cash flow for entrepreneurs, reduce costs, and encourage increased investments in capital goods.

Additionally, the thriving tourism sector can benefit from the VAT refund system, as foreign tourists can claim back the VAT paid upon their departure from the country. However, to complete refund operations correctly, laws and regulations imposed by the Ministry of Finance must be followed to ensure the eligibility for refunding the paid amounts, thereby reclaiming the full value promptly and avoiding the loss of potential tax incentives.

VAT Refund Cases

• VAT previously paid on goods and services exported: Up to the credit balance for goods and services eligible for tax deduction.
• VAT collected by mistake.
• Credit balance exceeding six consecutive tax periods.
• VAT previously paid on buses and passenger cars if their use is permitted for the establishment’s activity.
• VAT borne by a non-resident person registered under the simplified registration system.

The VAT is refunded within forty-five days from the date of submitting the application supported by the required documents.

Necessary Procedures and Regulations for VAT Refund

Before Completing the Refund Process:

To ensure the effectiveness of refund operations, the Ministry of Finance imposes a set of laws and regulations that must be followed to verify the eligibility for refunding the paid amounts. These procedures include:

• Submitting the necessary documents and invoices that prove tax payment.
• Fulfilling local and imported input requirements.
• Providing export certificates.
• Verifying production equivalence.
• Providing industrial oversight letters (for industrial establishments).
• Making cash payments and bank transfers.
• Issuing Form 15 VAT.
• Adhering to the deadlines for submitting refund requests.

Following these procedures ensures the company’s eligibility for refund operations.

After Completing the Refund Process:

The Ministry of Finance has also imposed restrictions to be followed after completing the refund operations to avoid repaying the refunded tax. For instance:

• Buses and Passenger Cars: In the event of disposing of buses and passenger cars that were previously refunded for purposes other than the licensed activity of the establishment before five years have passed, the establishment is required to repay the previously refunded tax.

Conclusion

VAT refund operations are a vital part of economic policies aimed at improving the business environment, encouraging investments, increasing competitiveness, and intensifying international trade. They also support the tourism sector by stimulating tourist spending. Therefore, adhering to the laws and regulations imposed for VAT refunds ensures the achievement of the desired economic benefits and contributes to sustainable economic growth.

To find out more, please fill out the form or email us at: info@eg.Andersen.com

Contact Us