The Ministry of Revenues has issued Directive No. 1132/2018, establishing the conditions and procedures for value added tax refunds. The Directive was issued pursuant to the authority granted under Article 51 of the Value Added Tax Proclamation No. 1341/2016 and is now in force. It replaces the previous refund directives and introduces a risk-based approach to the administration of VAT refunds, distinguishing between regular refunds, expedited refunds, and refunds for persons exempt by law. The Directive applies to any person entitled to a refund of VAT paid.
The Directive represents a significant development in VAT administration. It seeks to facilitate legitimate refund claims while safeguarding government revenue through risk classification, audit thresholds, documentary requirements, and payment timelines. It also introduces a manual for risk-based refund processing and sets specific timeframes for the assessment and payment of refunds depending on the risk profile of the claimant and the nature of the transaction. For taxpayers entitled to refunds, the Directive provides both a procedural framework and a set of compliance obligations that must be satisfied to secure timely payment.
The Directive regulates the conditions under which VAT refunds are made. It applies to registered persons who have paid VAT and are entitled to a refund under the Value Added Tax Proclamation. It covers refunds arising from zero-rated supplies, excess input tax credits, mixed supplies, and transactions involving persons exempt by law. It also addresses the documentary requirements for different categories of claimants, including exporters of goods, exporters of services, providers of international transport services, suppliers of gold to the National Bank, and privileged organisations such as diplomatic missions. The Directive also establishes the institutional framework for processing refunds, including the roles of tax audit, investment audit, service audit, and other work units.