Georgia is suffering from a huge calamity on their VAT Refund System, it is arising a massive aggregation of claims towards the system. So this tells us noticeably, that there is a loophole to dig in to figure out what’s wrong with the VAT Refund System. The flaws undoubtedly lies in the structure – perhaps more precisely on the design and the performance of the system (which is giving rise to a massive number of unpaid credits) – certainly claimed to be the weak point for the system by the IMF. Due to the flaws, the process is sluggish, raising in claims and other issues, despite even efforts to try to improve the repayment for the claims, the system should emphasize on reducing the existing stock which will eventually reduce the number of claims in the future.
The IMF reported that the amplification of claims is due to a number of factors:
- Refunds being made by the tax authority on request of the taxpayers, which in a way means Outstanding VAT claims cannot be categorized as dues.
- The belief of taxpayers that maintaining their unpaid, interest-bearing balance in their tax accounts will prevent them from the authority’s inspection.
- The authority having a rigid principle for the operation of automatic VAT Refund System.
Georgia’s revenue services is in stepping stones towards digitalization on its VAT Refund System which is believed to be the catalyst for the processing of VAT Claims.
