The Value Added Tax Act, 2013 (VAT Act) provides for the refund of VAT where as a result of a taxpayer making zero-rated supplies (mostly exports), their input VAT exceeds output VAT.
Further, the Tax Procedures Act, 2015 (TPA) provides for withholding of VAT (WHVAT) equivalent to 6% of the taxable supply. This often leads to a VAT credit position because the taxpayer has to first declare the entire output VAT amount and but only gets a WHVAT credit much later when the customer pays. Previously there was no provision for the refund of WHVAT credits with the result that some taxpayers carried the WHVAT credit in their books indefinitely with no possibility of getting a refund.
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