When a company takes its employees for an offsite visit abroad, the VAT paid on the local travel and the hotel accommodation is refundable.

Did you know that your company can claim a refund of the value-added tax (VAT) paid by it for sponsoring its employees' stay at hotels abroad? While the rate of taxes (VAT) range from 19-27 percent depending on the country, there is an option for the company to get it back if a claim is filed.

CB VAT, a firm specialising in foreign VAT refunds, has been in operation for 15 months in India. It is a part of the United Cash Back group which is a global firm engaged in international VAT recovery process for more than 30 years.

Sherman Roy, Chief Operating Officer, CB VAT said that the market for VAT refunds is primarily unorganised and that it can take anywhere between 3 months to 12 months depending on the size of the claim and the country.

When a company takes its employees for an offsite visit abroad, the VAT paid on the local travel and the hotel accommodation is refundable. Roy explained that when a company tries to file it themselves, a lot of time and resources are required to ensure that the right set of documents and accurate information is sent to the tax authorities.

CB VAT has filed €1.5 million VAT claims and has set a target of €5 million for next year. They have already received about €100,000 of VAT claims refunded.

“That is where players like CB VAT come in. Especially since tax authorities in the recent past have been sending many queries for the claims filed,” said Roy.

For instance, proper bills are required to be filed for VAT refund claims. Also, the bills are to be in the name of the company with their proper registered address.

Roy said that once their clients have filed a claim, they are given access to a portal where they can access the claims filed and also know at which stage their claim is at. A commission of 20-30 percent is charged by them.

There are countries in Europe and Asia that refund VAT (value added tax) paid on business travel and activities related expenses. There are several eligibility criteria for reclaims including tax treaties between countries.

Surprisingly, Roy said that not many companies are eager to get VAT refunds, especially if they are large firms. While awareness is increasing, he said that several firms choose to do it on their own, which could be time-consuming.

Going forward, CB VAT is looking to expand into other markets in South East Asia including Malaysia, China, Singapore, Taiwan and Indonesia. Also, the firm is exploring the area of sports to see what kind of taxes incur on sponsoring players (including cricket) when they travel abroad for matches. It is also looking into whether refunds (if any) can be claimed for this sector.

India, however, does not have any formal reciprocity agreement with other countries. Hence, for foreign companies, no tax refund is provided in India.