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How to Manage Value-Added Tax Refunds
Author:
Mario Pessoa
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Andrew Okello
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Artur Swistak null

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Muyangwa Muyangwa
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Virginia Alonso-Albarran
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Vincent de Paul Koukpaizan
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Series:
IMF How To Notes
Volume/Issue:
Volume 2021: Issue 004
Language:
English
Publication Date:
10 May 2021
DOI:
https://doi.org/10.5089/9781513577043.061
ISBN:
9781513577067
ISSN:
2522-7912
Pages:
26
Keywords:
value-added tax; refunds; VAT; management framework; VAT refund; Georgia revenue service; VAT system; Tax refunds; Tax administration core functions; Credit; Income; Global; Africa
Legal-disclaimer:
Fiscal Affairs Department (FAD) How to Notes offer practical advice from IMF staff members to policymakers on important fiscal issues. The views expressed in FAD How to Notes are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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The value-added tax (VAT) has the potential to generate significant government revenue. Despite its intrinsic self-enforcement capacity, many tax administrations find it challenging to refund excess input credits, which is critical to a well-functioning VAT system. Improperly functioning VAT refund practices can have profound implications for fiscal policy and management, including inaccurate deficit measurement, spending overruns, poor budget credibility, impaired treasury operations, and arrears accumulation.This note addresses the following issues: (1) What are VAT refunds and why should they be managed properly? (2) What practices should be put in place (in tax policy, tax administration, budget and treasury management, debt, and fiscal statistics) to help manage key aspects of VAT refunds? For a refund mechanism to be credible, the tax administration must ensure that it is equipped with the strategies, processes, and abilities needed to identify VAT refund fraud. It must also be prepared to act quickly to combat such fraud/schemes.
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Cover IMF How To Notes
IMF How To Notes
ISSN:
2522-7912
Publisher:
International Monetary Fund