The Committee on Public Finance (CoPF) has raised concerns over delays faced by small and medium exporters in obtaining Value Added Tax (VAT) refunds, while the Inland Revenue Department (IRD) maintained that about 95% of refunds are issued within the prescribed period.
The issue surfaced during the CoPF’s scrutiny of the IRD’s tax digitalisation and electronic invoicing plans, with Committee members pointing to complaints from exporters over delayed refunds.
MPs said small and medium exporters were complaining about refunds and questioned whether payments were being made within the required timeframe with exporters reporting that refunds were not being received within 14 days.
Responding, IRD officials said refund processing depended on the circumstances of individual files, including outstanding tax matters, return compliance, documentation and the risk classification assigned to a claim.
‘Sometimes, there is an outstanding that they don’t want to deal with. At such times, we can’t give them within 14-15 days. We have to issue it only after they have dealt with it,’ an IRD official told the CoPF.
The official said refund files were categorised according to risk and compliance considerations.
The IRD said claims were classified as high, medium or low risk, with low- and medium-risk refunds generally processed within 14-15 days. High-risk claims undergo a separate verification process before refunds are released.
‘About 95% of the refund will be issued within the given period,’ an IRD official told the Committee.
The official said delays in the remaining cases could arise from defaults, documentation issues or circumstances specific to the taxpayer’s file.
The Department said data analytics were being used in assessing refund risks.