Inland Revenue Division : Filing Vat Return Dominica

Name of the Organization : Inland Revenue Division
Type of Facility : Filing Vat Return
Country : Dominica

Official Website : http://ird.gov.dm/

Filing Vat Return :

Overview For Completing Claims And Applications For Refunds :
The Value Added Tax Act requires most businesses and many organizations in Dominica to :
** Register with the Inland Revenue Division;
** Charge and collect tax at 15% on all standard-rated supplies;

Related : Inland Revenue Division Apply For Liquor License Dominica : www.statusin.org/5210.html

** Charge and collect tax at 10% on accommodation in hotels, inns, guest houses and similar establishments;
** Calculate for each tax period (calendar month) the net tax payable/refundable
** File a V.A.T. Return for each tax period
** Remit the net V.A.T. to the Inland Revenue Division within 20 days following the end of each tax period;
** Make a claim on the Notice of Claim or Application for Refund form for any V.A.T. refundable.

Persons Entitled To File A V.A.T. Claim Or Application For Refund :
A.Registered Taxpayers Carrying On Business :
As a registered taxpayer, you will be filing V.A.T. returns showing the amounts of output tax and input tax related to your business activities for the month. Output tax means the amount of Value Added Tax that you have charged your customers and input tax means the amount of Value Added Tax that you have paid to your suppliers on local taxable supplies and to the Comptroller of Customs on imported goods.

In your case, there are two situations where you may file a claim for a V.A.T. refund :
1. If you normally pay V.A.T. monthly but, you reported more input tax than output tax in one tax period, and over six consecutive tax periods you have not used up all the excess credit, and the amount remaining from that tax period exceeds $100.00(examples of these types of refund situations are provided in Part II of this Guide); or
2. If you normally are in a situation of not paying V.A.T. because your input tax deductions are always larger than your output tax payable(for example in the case of zero-rated sales), and the amount exceeds $100.00, you may claim a refund related only to the input tax deductions directly related to your zero-related sales (more details are provided in Part II of this Guide)

B. Non-Registered Entities Such As Qualifying Agencies Providing Technical Or Humanitarian Assistance To Dominica, Diplomats, And Diplomatic Or Consular Missions, And Donors To Approved Charitable Organizations Of Unconditional Gifts Of Goods Or Services :
Agencies, entities, or persons that are described in the heading above should apply for a refund of V.A.T. paid on their purchases. A list of the approved charitable organizations for which such refunds apply is shown in Appendix I of this guide. The procedures for compiling data and completing the application(s) related to these refunds are explained in Parts II and III of this guide.

C. Persons Who Have Overpaid V.A.T. :
Persons who have overpaid V.A.T. and are unable to offset the overpayment against V.A.T. owing may apply for a refund. One situation where this may arise is when a non-registered person has imported goods and made an error in the calculation of V.A.T. payable. For example, if the value of the goods was incorrectly declared, and the importer requested a Guide to Filing V.A.T. Claims and Applications for Refund 5 refund of duty and tax overpaid, the V.A.T. portion must be claimed on Form V.A.T. 006 “Application for Refund”. The procedures for completing the application are explained in Parts II and III of this guide.

V.A.T. Claim Or Application For Refund :

A.Registered Taxpayers Carrying On Business :
In Part I of this guide, there were two situations described where a refund of V.A.T. may be claimed. The first situation is where a taxpayer occasionally has an excess credit carried forward for a continuous period of more than six tax periods. Usually this will be caused by a significant capital expenditure, significant purchase of stock or a sharp decline in sales.

Should either of these situations occur, the Notice of Account that you receive from Inland Revenue Division will advise you when you are entitled to apply for a refund of V.A.T. and will advise you of the amount available for refund. When you receive this Notice of Account you must decide if you wish to claim the refund or to have it offset against future output tax obligations. More details concerning this issue are contained in your Notice of Account.

To give you an idea of how refunds are determined by the automated system at Inland Revenue Division, several examples of refund situations are shown below :
The first example is where a business may be expanding their premises and are importing materials and buying other construction materials locally. These imports and purchases provide the business with a large amount of input tax deductions each month. The company is entitled to start claiming refunds at the seventh tax period and could claim a refund for each tax period’s excess credit each time they reached the seventh month following the month in which the excess credit was created. This company would receive a Notice of Account each month showing the accumulating amount of credit available. The Notice of Account for the August 06 tax period (issued in September 06) would tell the taxpayer that they were now eligible to claim a refund of $31,000.

The second example is where a business was also renovating and enlarging its premises. Once the renovations were complete and additional stock was imported, the company had a renovation promotion in July 06 that generated a large amount of sales. This promotion resulted in the charging of output tax that used up the available $99,000 credit and required a payment of $21,000 in V.A.T. The business was then able to take advantage of the purchase of a large amount of stock at a low price in August 06, but sales after that were very weak. The company had to wait until it received its Notice of Account for the Jan 07 tax period (received in Feb 07) to claim its refund of $74,000.

The third example is where a company was starting up and had a major equipment purchase in its first month. Regular purchases of stock, and sales to customers started in July 2006. By the seventh tax period, the original amount of credit available ($175,000) had been reduced to $91,000. This happened because for the previous three months up to and including the seventh month (when the refund could be claimed), output tax exceeded input tax by a total of $84,000 ($26,000 + $27,000 + $31,000). When this occurs, the V.A.T. due ($84,000) is deducted from the oldest credit amount available ($175,000). In the seventh month, the business received its Notice of Account for the Aug 06 tax period and was able to claim as a refund the $91,000 remaining from the first tax period. In this example, the taxpayer claimed the refund, but he or she may also have elected to carry it forward to be credited towards tax liabilities in Oct 06 to Dec 06.

The fourth example is where a company also made large initial investments in equipment and stock in its two first months of business. As sales to customers started in July 2006, the company was using its excess credits from the first month to “pay” the V.A.T. owing. By the time it reached the seventh month, the taxpayer was notified by their Notice of Account that there was $66,000 available from the first month (Mar 06) for refund ($140,000 minus $26,000 minus $23,000 minus $25,000 = $66,000). The excess credit of $35,000 that was created in the third month (May 06) was used to “pay” V.A.T. for October ($24,000) and November ($11,000) before it became available for refund, so no refund could be claimed.

Although these examples may seem complicated, the principles are straightforward. Remember that when you file returns that result in a credit (more input tax claimed than output tax charged), you will be receiving a Notice of Account from the Inland Revenue Division providing you with the data required to file your next tax period’s return. Please note that if you have an unpaid tax liability for V.A.T. or another tax type, the Inland Revenue Division will apply the V.A.T. credit to your liability. You can also request the I.R.D. to offset an unpaid liability for a specific tax type with your V.A.T. credit by attaching a letter of instruction to your V.A.T. return. Please specify the tax type and the tax period you would like the amount overpaid to be credited to.

Download Forms : http://ird.gov.dm/