POSSIBLE APPROACHES OF DEFINING MINIMUM LEVEL OF VAT REFUNDS IN TAX ADMINISTRATIONS

Poorly organized VAT refund system represents operational (Failure in fulfilling all claims within defined deadlines) as well as fiscal risk (accumulation of large stock of overpaid amounts in the long run subject to refund immediately or at a later period and theoretically claimable within the same period of time) for tax administrations. Hence it is important for tax authority to prepare and forecast expectable minimum level of possible refunds in advance. Refunds claimed above the previously estimated amounts, may also be used as an additional indicator of possible fraud or refund abuse. It also needs to be noted, that adequacy of refund system, happens to be one of the indicators, used to evaluate efficiency of tax administration and tax system as a whole.