VAT Refunds: A Review of Country Experience

November 1, 2005

Preview Citation

Format: Chicago

Graham Harrison, and Russell Krelove. VAT Refunds: A Review of Country Experience, (USA: International Monetary Fund, 2005) accessed December 26, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

A key feature of the invoice-credit form of value-added tax (VAT) is that some businesses- notably exporters-will pay more tax on their purchases than is due on their sales, and so can seek refunds of excess credits from government. While refunding is straightforward in principle, serious problems arise in practice, including opportunities for fraud and corruption, and denial of refunds by governments with cash shortages. This makes the refund process the "Achilles heel" of the VAT. This paper examines the refund approaches of tax administrations in 36 developing, transitional, and developed countries. It evaluates the effectiveness of these approaches and suggests a model of best practice that takes into consideration compliance issues faced by countries during different stages of development.

Subject: Auditing, Fiscal accounting and reporting, Tax administration core functions, Tax refunds, Value-added tax

Keywords: Audit program, Refund claim, Refund level, Tax administration, VAT fraud, VAT refund, WP

Publication Details

Pages:

43
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2005/218
Stock No:

WPIEA2005218
ISBN:

9781451862379
ISSN:

1018-5941

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