The Internal Revenue Service (SRI) has established the rules that regulate the procedure and requirements for refunding to senior citizens the Value Added Tax (VAT) on local purchases of goods and services for personal consumption[1]. The resolution mainly establishes the following:
Refund by administrative order
- This is a process by which the right to a VAT refund for senior citizens is recognized through a reasoned administrative order in response to a filed application.
- The application for refund must be filed for each month, in the following month. However, it is possible to accumulate up to 12 months of the same tax year in the same application. Several refund applications may be submitted for the same month, provided that they are for new sales receipts which were not filed beforehand and there is an available balance for such period.
- The application may be filed in person or electronically. Starting with the second application, it may be filed through the online service channel.
- The SRI will make a decision through an administrative order in response to the application for a VAT refund and, if applicable, will request the accreditation of the corresponding amounts in the indicated bank account, which must be under the name of the senior citizen.
- The sales receipts for which the refund is applied for must be saved for 7 years from their issuance date.
Automatic refund for transactions involving electronic receipts
- This is a process by which the benefit is applied at the time of purchase of goods and/or services in transactions where electronic receipts (invoices and debit notes) were issued.
- For each purchase where electronic receipts were issued, the VAT refund will be applied immediately.
- It will be applied to the VAT amount generated in the local purchase of goods and services for personal consumption that is not related to or intended for commercial activities.
- Electronic issuers must have their own catalogue of goods or services on which they will apply the automatic VAT refund.
- Senior citizens shall file a one-time application for registration of the automatic channel for the VAT refund and for the generation of the confirmation code, which will be renewed each year.
- The VAT amount subject to refund will be applied on the invoice itself upon acceptance by the senior citizen through their confirmation code and validation of the transaction information by the SRI.
- Electronic issuers that use this new scheme must consider the provisions of the Technical Guide, as well as be subject to the additional requirements of uniqueness and other specifications made for invoices, debit receipts and credit receipts published to this effect.
- Through “web services” links, electronic issuers will be able to identify those beneficiaries who are authorized to receive the automatic refund.
- When electronic issuers, due to the nature of their business activity, keep service contracts and carry out mass transactions with senior citizens, the confirmation code will not be required for the automatic VAT refund.
- Taxpayers who issue electronic receipts with an automatic VAT refund must report the returned values on the Value Added Tax form.
Other provisions:
- The amounts returned through the different modes cannot exceed the maximum monthly amount to be returned to senior citizens.
- The right to the VAT refund for senior citizens of foreign nationalities will apply as of the date on which they obtained their residency status.
- The Tax Administration may carry out document inspections and/or request the original documentation supporting the refund if deemed necessary.
[1] Resolution No. NAC-DGERCGC20-0000005 published in the Special Edition of the Official Register No. 1100 of September 30, 2020.
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