VAT Refund scenario generally exists where the industries are in zero rated VAT Rate slab or at the inception stage of company where generally expenses or capex are incurred till operations start full fledge.
A Taxable Person may claim a refund of the amount of excess Input Deductible Tax (VAT) over Output VAT. KSA Regulations specified certain circumstances which is mentioned below under which VAT Refund can be claimed:
Upon filing a Tax Return for a Tax Period where Net Tax is an amount due to the Taxable Person,
- Where the Taxable Person has paid an amount in excess of the amount of Tax due,
- Where the Taxable Person has a VAT credit balance.
Procedure to be followed / Points to be kept in mind to get KSA VAT Refund
- A Taxable Person may submit a request to the Authority for refund in any circumstances as prescribed aboveat the time the Tax Return is filed, or at any other time within five (5) years following the end of the calendar year for which the circumstances relate.
One has to be very careful while filing Tax Return. There is an option at step no. 4 stating that “If you wish to request a refund, kindly click here:” In such option, “Yes” to be selected. Apart from that IBAN details to be mentioned which is linked with Company ID / Personal ID so that disbursement of refund credited to such linked account.
- Once the Periodical Tax return is filed. Refund application to be made separately online. Form this, one need to first login at gazt.gov.sa. There after select “Indirect Tax Refund” under Indirect Tax Tab and accordingly follow the instructions. AT the time of filing refund application, there are certain details which need to be uploaded at site. Below is the illustration list of requirements which need to be uploaded at site while filing for KSA VAT Refund or Refund of Tax Return:
- Trial Balance for the submitted return extracted from the system in PDF Format which contains beginning balances, debit movement, credit movement, and ending balance for the return period.
- Trial Balance in Excel Format
- Bank account statements for the submitted return
- Detailed sales listing in excel with breakup of standard rate, zero and exempt along with VAT Rate and VAT Amount.
- Detailed list for standard rated purchases with breakup of Basic amount and VAT amount in excel format.
A refund request may be rejected if there are any Tax Returns due and not submitted with the Authority.
The Authority will review the Taxable Person’s request, and may approve the refund, issue a rejection in part or in full, or may request additional information from the Taxable Person for verification. Once a refund is approved in full or in part, the Authority must conclude refund procedures and initiate payment within sixty (60) days from the date of approval of the request. Payment is to be made by way of bank transfer to the Taxable Person’s registered bank account.
The Authority may offset excess Tax held in the Taxable Person’s VAT account against taxes, penalties or any other amounts due to the Authority, or withhold payment pending the resolution of outstanding assessments raised against that Taxable Person in respect of other taxes.
It is very necessary to make application for Refund of Tax at regular interval so that there will not be burden to provide huge details to VAT Authority which shall lead to smoothen the process of Refund. Apart from that it will have a positive impact on cash flow.
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