The Right to a VAT Refund and Its Sources
A taxable person acquires the right to a refund of a VAT amount where in a reporting period the creditable VAT exceeds the VAT to be assessed — the classic excess scheme where the payable VAT on purchases exceeds that on sales. Other sources exist as well: a grant recipient who purchased goods or services under a grant agreement may credit or refund the paid VAT on the basis of a tax invoice or a document confirming payment into the budget on reverse charge; in that case the document must be presented to the organ within 3 months of the end of the month of the taxable operation. A special rule concerns a foreign citizen: on taking goods purchased in Georgia out of the territory the person may refund the VAT paid, where the export takes place within 3 months of purchase and the value per one receipt exceeds 200 lari without VAT; the refund rests on a special receipt issued by an authorized seller.
Note the detail: the procedure of this refund — the rules, the criteria to be met by the authorized seller of the goods, and the list of goods to which the rule does not apply — are determined by the Minister of Finance, so the practical details are transferred to a ministry-level normative act.
The General Rule of Refunding Overpaid Amounts
The VAT refund rests on the general mechanism for refunding overpaid amounts: where the amount of taxes or sanctions paid by the taxpayer exceeds the assessed amount, the tax organ, on the person's request, refunds the overpaid amount no later than 1 month from the submission of the request. Where the paid amount exceeds acknowledged tax debt, the organ applies the excess to cover subsequently assessed and acknowledged debt — existing indebtedness is thus subject to automatic apportionment before refund. The case of an amount incorrectly written off by an incasso order of the tax organ is resolved under the same regime.
The law also defines two cases of a faster refund: an amount incorrectly written off by an incasso order of the tax organ — including one arising from the simultaneous execution of the incasso order by two or more banking institutions — is refunded to the taxpayer no later than 15 days of the submission of the application; and in individual cases, toward a person carrying out electronic declaration, an automatic refund of the overpaid tax is also possible. A refund without a request exists as well — by decision of the head of the Revenue Service; the rules and conditions of these regimes are determined by the Minister of Finance of Georgia.
The Taxpayer's Request: Form and Dispute
The launching instrument of the refund process is the taxpayer's request — a request presented to the tax organ for the refund of an overpaid amount of taxes or sanctions, whose performance is mandatory in the cases provided for. The request is deemed fulfilled from the moment of payment of the requested amount. Where the organ considers the request unfounded, it is obliged to present the taxpayer a reasoned counter-statement within 20 days of receipt, and the counter-statement may be appealed under the procedure established by the Code. Such is the architecture of the dispute: request — the 1-month refund term — the 20-day counter-statement — appeal.
Documentary Grounds and Practical Recommendations
The RS.ge electronic space is the standard channel of the refund procedure, yet the electronic form does not replace the documentary basis: invoices, import declarations and receipts are the basis depicting each credit. In practice a refund request is measured together with the declaration of the period in which the excess arose, and the operations of subsequent periods materially change the picture — the planning of a refund therefore takes place with the reporting period in view.
Managing Excess Across Reporting Periods
The dynamics of excess appear in the sequence of reporting periods: a month of large investment purchases is followed by a period of growing sales, and each declaration shows its own picture. The question of refund is therefore decided not by the accounting of one period but by the calendar of the whole year: the refund of excess merges into the settlement with the taxes in the budget. In the grant case the 3-month documentary term demands additional discipline, since a late document defeats the very right to credit or refund. In the foreigner's export of goods the 200 lari threshold is a question of grouping receipts: a value below the lower threshold on a single receipt triggers no refund.
Frequently Asked Questions
Below we answer the questions most frequently asked on this subject.
When does the right to a refund arise?
Where the creditable VAT of a period exceeds the assessed amount; also on purchases under a grant and on a foreigner's export of goods.
Within what time does the organ refund?
No later than 1 month from the request.
What if the organ deems the request unfounded?
A reasoned counter-statement within 20 days, appealable.
What conditions attach to a foreigner's refund?
Export within 3 months of purchase and a value above 200 lari per receipt without VAT.
Is an automatic refund possible?
Yes — in individual cases, in connection with electronic declaration; the rules and conditions of the automatic refund are determined by the Minister of Finance.
How We Help on Legal.ge
A VAT refund demands documentary precision and observance of deadlines. On Legal.ge you can consult a tax lawyer who will prepare the request and defend your interests in the counter-statement dispute. Submit a request on the site and receive qualified assistance.