Managing VAT Refunds - To Be Globally Competitive

MANAGING FINANCE AND GROWTH: EMERGING ISSUES AND CHALLENGES, pp. 269-282, Chinmoy Sahu, M. Mallikarjun, eds., Excel Books, New Delhi, January 2006

14 Pages Posted: 6 Mar 2011 Last revised: 9 Jun 2012

See all articles by Pawan K. Chugan

Pawan K. Chugan

Nirma University - Institute of Management

Date Written: January 1, 2006

Abstract

In international business, competitiveness is the crux of success, which means every effort has to be made to reduce the cost of production and marketing. Every single penny saved matters a lot and adds to an exporter’s global competitiveness. One such area that needs to be looked into is refund of VAT from the business expenses incurred abroad by the international businessmen. Depending upon the size of business, cost reduction through this method may vary from a few hundred or thousand Euros/Dollars to several million Euros/Dollars. These VAT refunds constitute about 2% to 6% of international business travel-related spending and a large corporation which incurs about $6 Million in international spending could save approximately $1,80,000 through this route. It is interesting to note that with substantial funds locked in VAT refunds, as high as 25% in EU, this particular cost of international business remains unexploited and businesses knowingly or unknowingly have been simply booking VAT expenses as costs and ignoring the real potential of making savings by recovering VAT frequently from the authorities. An attempt has been made in this paper to elaborate upon the various aspects of VAT refunds so that the international businessmen may explore the full potential of such a facility and recover their legitimate dues from the foreign governments and become more competitive in global trading. The paper not only describes the concept of VAT with its background particularly with reference to EU VAT legislation but also underscores the VAT rates, details of recoverable VAT expenses and related matters, required documentation and lists out a few VAT recovery agencies such as VAT Recovery Group (VRG), Corporate VAT Management (CVM), American Express and CVM, Deloitte and CVM, Gelco Expense Management (GEM) and (CVM), and CVM and InterplX, etc. which provide VAT refund services to their corporate clients.

Keywords: [cVAT, Value-added tax, VAT refunds, VAT rates, EU VAT Legislation, VAT recoverable expenses, VAT recovery agenciesomma separated]

JEL Classification: E6, F23, F42, H2, H32, H87, K34

Suggested Citation

Chugan, Pawan Kumar, Managing VAT Refunds - To Be Globally Competitive (January 1, 2006). MANAGING FINANCE AND GROWTH: EMERGING ISSUES AND CHALLENGES, pp. 269-282, Chinmoy Sahu, M. Mallikarjun, eds., Excel Books, New Delhi, January 2006. Available at SSRN: https://ssrn.com/abstract=1776711

Pawan Kumar Chugan (Contact Author)

Nirma University - Institute of Management ( email )

Sarkhej Gandhinagar Highway
Ahmedabad, Gujarat 382481
India
+912717241900 (Phone)
+912717241916 (Fax)

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