2024-03-21 23:54:28
From April 2024, the VAT rate will rise to 15% and with this the maximum refund amount that vulnerable groups can request increases.
The maximum monthly refund amount of Value Added Tax (VAT) for people with disabilities and the elderly will be higher. This will happen once the VAT rises from 12% to 15%, when the new Law to confront the internal armed conflict comes into effect, explains Idrián Estrella, tax consultant.
Although the new law provides that the VAT rate rises to 13%, the rule also allows the Executive to increase it up to 15%, with a report from the Ministry of Finance. And President Daniel Noboa has already confirmed that he will order the increase to 15% from April 2024.
Estrella explains that at this time, the maximum value that can be returned to older adults is the equivalent of 12% (VAT rate) of two unified basic salaries (SBU), which is USD 460 in 2024.
Thus, for example, the maximum that can be refunded for VAT to each elderly adult is USD 110.4; that is, 12% of USD 920 (two basic salaries in 2024). In 2023, the maximum amount was USD 108, because the SBU was USD 450. But when the VAT rises to 15%, from April 2024, the maximum amount that can be returned will be USD 138.
Because the refund is requested the month following the issuance of the receipts, taxpayers will be able to access these higher amounts in their applications submitted since May.
Will delays in VAT refunds continue?
The VAT refund should be made within 90 business days for people with disabilities and for older adults in 60 days, as established by the regulations of the Internal Tax Regime Law.
However, there are beneficiaries who have been waiting since October 2023 for the refund of this tax to be credited to their bank accounts, acknowledges the director of the Internal Revenue Service (SRI), Damián Larco.
Until February 2024, the pending VAT refunds for crediting these two vulnerable groups amounted to USD 100 million.
However, Larco explained that in April 2024, when the VAT rate is increased from 12% to 15%, the fiscal fund will have more liquidity, allowing the Government to gradually catch up with this payment. If you are part of one of these two vulnerable groups, this is what you need to know to request a VAT refund.
Who enjoys the benefit?
Only people with a disability equal to or greater than 30% and who have a document supporting it can access this benefit. Ecuadorians, as well as foreigners residing in Ecuador who are 65 years of age or older, are also entitled to this refund.
What purchases does the refund apply to?
A VAT refund can only be requested when it comes to goods and services for the personal use of the elderly or disabled taxpayer, for example, clothing, food, medicine, housing, transportation and education. To request a VAT refund, it is mandatory that the receipt be issued in the name of the beneficiary.
In-person or virtual procedure
The procedure to request a VAT refund must be done through the SRI online virtual platform. This is because electronic invoicing has been mandatory since November 2022.
With this, the purchase receipts are online, and it is not necessary for taxpayers to physically present the invoices at the SRI window, as was the case before. Estrella explains that the procedure can be done in person only in cases where the taxpayer wants to request a VAT refund with physical invoices issued before November 2022.
How to request a refund for the first time?
If this is the first time you are requesting a refund, you must go in person to the SRI offices to request your username and password to access the SRI online portal. To obtain the username and password, the taxpayer must also have an email address. On the portal you will find an option to register a bank account, where returns will be credited to you.
Requests can accumulate
Taxpayers will be able to request a VAT refund each month. But, they can also request a refund for several accumulated months. For example, the taxpayer can request a VAT refund on January and February invoices in March. There is no limit or maximum number of months that a taxpayer can accumulate in a single month.
SRI refunds VAT from up to five years ago
Taxpayers may request a VAT refund for invoices for which up to five years have passed since their issuance.
Source: PRIMICIAS