VAT refund audits conducted at NAMRA
Carmen Fransman - More and more taxpayers find themselves in a value-added tax (VAT) refund position.
This could be the result of increased imported stock, earning zero-rated revenue or significant local acquisition of fixed assets during a tax period, leading to a higher input tax amount deducted from the output tax payable. Refunds are not automatically paid out as most refunds are subject to an audit. Herewith an overview of what to expect and what may be requested when subject to a desk-VAT refund audit.
PRE-AUDIT
Periods flagged for audit are indicated on the Integrated Tax Administration System (ITAS) of the Namibia Revenue Agency (NAMRA) as “to be audited”. Taxpayers are required to secure an audit date with the official responsible for their casefile. Following the confirmation of a date, the taxpayer is required to provide a copy of the VAT return(s), bank statements and a summary of all the input and output for each of the selected periods.
DURING THE AUDIT
Taxpayers should be prepared to answer questions pertaining to the below, as an introduction to the audit: nature of the business, source of revenue and accounting basis. The following documentation is required to be readily available, as published in the “Guide for Pre-Audit” (October 2017) by the VAT Desk Audit department:
Income declared (Output):
Sales VAT summary for the period(s), bank statements for the period(s), loan agreement(s), and zero-rated sales (i.e. for exports, present related tax invoice(s) and exportation documents). Construction companies must present tax invoices/contract for work done in the period and information on the accounting system used.
Expenditure claimed (Input):
Purchases VAT summary for the period(s) and historical VAT summaries for period(s) to which the input adjustments originally belonged. In the event that capital goods were claimed, both tax invoices and vehicle registration certificates from NaTIS must be presented. In cases whereby only imports are being claimed and are the main cause of the refund, the related ASYCUDA report and/or SAD 500 must be presented.
POST-AUDIT
The official prepares an audit report for superior review and approval, followed by the refund being indicated as “cleared” for payment.
The amount of the refund is first applied to any outstanding tax, interest or penalty payable in terms of relevant provisions per the VAT Act. Any credit balance remaining, shall be refunded to a taxpayer no later than the end of the second calendar month following the date the credit balance arose.
Any balance of delayed refunds attracts interest at the rate of 11% per annum, calculated from the due date prescribed above to the date of payment. Taxpayers are encouraged to maintain a “good standing” record of all their tax accounts as any non-compliance may impact or delay the payment of refunds.
* Carmen Fransman is the manager: indirect tax at PwC Namibia. Contact her at [email protected]
This could be the result of increased imported stock, earning zero-rated revenue or significant local acquisition of fixed assets during a tax period, leading to a higher input tax amount deducted from the output tax payable. Refunds are not automatically paid out as most refunds are subject to an audit. Herewith an overview of what to expect and what may be requested when subject to a desk-VAT refund audit.
PRE-AUDIT
Periods flagged for audit are indicated on the Integrated Tax Administration System (ITAS) of the Namibia Revenue Agency (NAMRA) as “to be audited”. Taxpayers are required to secure an audit date with the official responsible for their casefile. Following the confirmation of a date, the taxpayer is required to provide a copy of the VAT return(s), bank statements and a summary of all the input and output for each of the selected periods.
DURING THE AUDIT
Taxpayers should be prepared to answer questions pertaining to the below, as an introduction to the audit: nature of the business, source of revenue and accounting basis. The following documentation is required to be readily available, as published in the “Guide for Pre-Audit” (October 2017) by the VAT Desk Audit department:
Income declared (Output):
Sales VAT summary for the period(s), bank statements for the period(s), loan agreement(s), and zero-rated sales (i.e. for exports, present related tax invoice(s) and exportation documents). Construction companies must present tax invoices/contract for work done in the period and information on the accounting system used.
Expenditure claimed (Input):
Purchases VAT summary for the period(s) and historical VAT summaries for period(s) to which the input adjustments originally belonged. In the event that capital goods were claimed, both tax invoices and vehicle registration certificates from NaTIS must be presented. In cases whereby only imports are being claimed and are the main cause of the refund, the related ASYCUDA report and/or SAD 500 must be presented.
POST-AUDIT
The official prepares an audit report for superior review and approval, followed by the refund being indicated as “cleared” for payment.
The amount of the refund is first applied to any outstanding tax, interest or penalty payable in terms of relevant provisions per the VAT Act. Any credit balance remaining, shall be refunded to a taxpayer no later than the end of the second calendar month following the date the credit balance arose.
Any balance of delayed refunds attracts interest at the rate of 11% per annum, calculated from the due date prescribed above to the date of payment. Taxpayers are encouraged to maintain a “good standing” record of all their tax accounts as any non-compliance may impact or delay the payment of refunds.
* Carmen Fransman is the manager: indirect tax at PwC Namibia. Contact her at [email protected]
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