VAT Refund Streamlining Procedures
The Ministry of Finance and the Egyptian Tax Authority (ETA) were keen to streamline the VAT refund procedures by unifying them and reducing the time required for its refund.
This streamlines the procedures for financiers and investors, provides all means of technical support, and extends bridges of cooperation with them, thereby improving the investment climate and attracting more investors, enhancing the Egyptian national income.
The Cases in which the VAT Will Be Refunded
- The tax previously paid or charged on the exported goods and services.
- The tax was collected by mistake.
- The credit balances that have passed more than six consecutive tax periods in the following cases:
- The difference in tax category between inputs and outputs.
- The Accrual of tax on inventory in a registered account.
- The sale to exempt entities that are legally permitted to deduct tax on inputs of taxable commodities and services sold to them.
- Previously paid tax on buses and passenger cars if their use is the facility’s licensed activity.
- Tax incurred by a registered non-resident person under the Simplified Supplier Registration System to perform his activity within the country.
Conditions for Requesting a VAT Refund
There are several conditions that financiers must adhere to in order to request a VAT refund, including:
- To commit to the legal period for requesting a VAT refund, which is five years from the date of paying the tax.
- To ensure that the VAT requested to be refunded has not been listed within the cost so that the VAT refund request is not rejected.
- To commit to submitting the production equation when requesting a VAT refund on exported and locally manufactured goods to avoid rejection of the refund request.
- To provide all documents before submitting the VAT refund request to avoid rejection.
Note
It is worth noting that any paper invoice is not accepted as evidence of a VAT refund request, and the ETA will receive requests accompanied by all documents necessary, under review for five working days. To learn more about the documents required to request a VAT refund, click here.
However, if all the documents are not submitted, the tax office will notify the applicant to complete the document within ten days maximum from the date of notification. If the applicant does not submit the required documents within this period, the VAT refund request will be rejected.
What Are the Reasons for Rejecting a VAT Refund Request?
- The company failed to complete the required documents: If the company does not submit these documents, the application will be rejected.
- Exhaustion of the credit balance: If the company has a credit balance used to pay other debts in any tax, its request will be rejected because the balance no longer exists to cover the value of the requested VAT refund.
- Inclusion of tax within the cost: If the company includes the tax within the cost, its request will be rejected, as the cost of obtaining revenue is reduced, and thus, it is used to reduce the income tax in its annual tax return.
- Negative charges or the use of machinery to perform a tax-exempt service.
- Tax evasion report: If the company has a tax evasion report, its application will be rejected.
- The company does not submit the production equation: If the company wants to refund the tax on exported and locally manufactured goods, it must submit the production equation.
- Five-year statute of limitations: It is not possible to submit a VAT refund request after five years from the date of paying the tax.
Now you know everything about the VAT refund procedures, the cases in which the VAT will be refunded, the conditions for requesting a refund, and the reasons for rejecting the refund request. To learn more about the tax refund, click here. To find out all the answers to questions regarding VAT refunds, click here.
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