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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,
Procedure to be followed / Points to be kept in mind to get KSA VAT Refund
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.
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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