Removing obstacles in value-added tax refunds.
(Baonghean.vn) - Recently, the National Assembly and the Government have been decisively directing the tax refund process. However, there are still difficulties that need to be overcome.
There are still businesses that have not received their tax refunds.
Following the directives of the Government, the Prime Minister, and the Minister of Finance regarding the acceleration of value-added tax (VAT) refund processing, the Nghe An Tax Department has recently coordinated with other agencies to expedite the refund process and strengthen control over VAT refund procedures, ensuring strict adherence to legal regulations. From January 1st to November 8th, 2023, the Nghe An Provincial Tax Department received 110 VAT refund applications totaling 573 billion VND; currently, 110 applications have been processed, totaling 544 billion VND.
However, in Nghe An province, there are currently two entities that have not yet received their tax refunds from the previous year. Specifically, Trung Hung Investment and Development Joint Stock Company in Vinh City, which specializes in purchasing cassava starch and then exporting it to the Chinese market, had a tax refund period from November/December 2020 to March 2021 amounting to 18 billion VND, but from that time until now, the company has not received its refund.
Previously, on August 24, 2022, the Nghe An Provincial Tax Department explained that the reason this company had not yet received a tax refund was because: “The amount of tax that is ineligible for refund according to Conclusion No. 7783/CT-TTKT2 dated December 22, 2021, of the Inspection Team under Decision No. 13/QD-CT dated January 5, 2021, is 18 billion VND and is still awaiting verification by the Police agency as directed by the General Department of Taxation in Official Letter No. 2413/TCT-TTKT dated July 7, 2022, and Official Letter No. 607/CSKT dated July 16, 2022, of the Economic Police Department of Nghe An Provincial Police.”
A representative from Trung Hung Investment and Development Joint Stock Company stated that the company had submitted a written request to the Nghe An Tax Department with the following content: "After the investigating agency confirmed that our company showed no signs of violating the law, and our documentation is now complete, including sales contracts and warehouse receipts, we have still not received a tax refund."
Another company that has yet to receive a tax refund is Thanh Thanh Dat Co., Ltd. in Vinh City, a company specializing in trading MDF industrial wood products and wood chips in 10 provinces and cities nationwide, exporting a significant amount of these products annually. From 2021 to the present, the amount of overdue VAT refunds for this company is 120 billion VND across 10 tax departments nationwide, including the Nghe An Tax Department.
Because it falls outside the local jurisdiction, the company's tax refund application is currently under review. Facing this difficulty, Thanh Thanh Dat Co., Ltd. has submitted a joint petition to the Vietnam Wood and Forest Products Association regarding the obstacles in processing export VAT refund applications for wood and wood products, but the company is still waiting...
Many obstacles and shortcomings
The VAT refund process has faced certain difficulties and shortcomings in recent times. Specifically, some regulations are still inconsistent and unclear; the verification and coordination of invoices in practice still have many inadequacies and low efficiency, leading to prolonged refund times in many cases. This has somewhat affected the financial resources of businesses.
In addition, there are still shortcomings in tracing and verifying the origin of products. For example, businesses exporting cassava starch and wood chips in Nghe An province are required by regulations to verify the origin of their products down to the individual households growing cassava or planting trees in each hamlet or village.
Meanwhile, Nghe An province is vast, and a single export shipment is purchased from numerous forest-farming households in various locations, making the required verification process somewhat impractical. In some cases, companies based in Nghe An purchase goods and raw materials from other provinces and cities, requiring tax authorities to create verification forms and send them to tax departments in other provinces for further verification. These tax departments then instruct their subordinate local tax offices to conduct further verification, causing delays and a very manual verification process!
In cases where there are suspected violations, the authorities must intervene. To effectively carry out tax refund procedures, the authorities in Nghe An province have been implementing solutions such as: strictly controlling signs of tax evasion and fraudulent value-added tax refunds; coordinating with tax management agencies, especially customs and market management agencies, to verify the origin of goods; gathering and exchanging information on fraudulent schemes related to export and import goods with suspected tax evasion; and ensuring that tax refunds are granted to the correct recipients in accordance with the State's policies and laws.
Mr. Nguyen Dinh Duc, Director of the Nghe An Tax Department, stated: Recently, tax authorities nationwide have detected several suspicious signs in VAT refund applications from some businesses exporting cassava starch to China, such as businesses no longer operating or having disappeared; bank payment documents not bearing the correct buyer's name; and cross-border bank transfers that do not comply with regulations regarding payment conditions for tax refunds…
Regarding the two aforementioned entities, the tax authorities have coordinated with relevant agencies to verify and clarify several issues as requested by the General Department of Taxation of Vietnam concerning the origin of goods, transportation, etc. Currently, the tax authorities are continuing to coordinate to determine whether the businesses' sales contracts are invalid.
Recently, the National Assembly Standing Committee's supervisory delegation worked with numerous tax departments nationwide and businesses. The results showed that the processing of VAT refunds in 2022, and especially in the first six months of 2023, was slower than in previous years, with only 79% of refund applications processed.
Specifically, while the percentage of pre-audited tax returns increased compared to previous years (25%), the number of pending returns – those being processed and yet to be refunded – was 1,839, accounting for 17%. Industries experiencing delays in tax refunds include: wood and wood products (85% of returns processed); cassava starch (45%); rubber (62%); and electrical and electronic components (59%) (lower than the usual rate of over 90%). Notably, the amount of tax arrears collected after audits accounted for only a small, insignificant percentage...
According to the Ministry of Finance, as of October 31, 2023, tax authorities had issued 15,025 decisions, corresponding to a tax refund amount of VND 112,873 billion, equivalent to 70.5% of the estimated amount reported to the National Assembly (VND 160,000 billion), and 91% of the same period in 2022.
Specifically: Refunds for exports totaled 13,606 decisions with a total refund amount of VND 93,546 billion, accounting for 82.9% of the total refunds, and 84% compared to the same period in 2022; Refunds for investment projects totaled 761 decisions with a total refund amount of VND 18,875 billion, accounting for 16.7% of the total refunds, and 154% compared to the same period in 2022; Refunds for other cases such as dissolution, termination of operations, ODA projects, diplomatic exemptions, etc. totaled 658 decisions with a total refund amount of VND 452 billion.
The General Department of Taxation also conducted post-refund inspections and audits on 5,535 files, resulting in the discovery and recovery of 190.6 billion VND in taxes and administrative penalties totaling 64.7 billion VND. The amount of recovered Value Added Tax (VAT) refunds paid to the state budget as of October 31, 2023, was 915 billion VND.
The National Assembly's Finance and Budget Committee is proposing that the Government direct the Ministry of Finance to study and finalize relevant documents, especially proposals to amend the Law on Tax Administration and the Law on Value Added Tax, focusing on resolving and handling all outstanding refund applications from several export sectors that are facing difficulties by December 31, 2023…
