In the first two months of the year, the tax authorities issued 3,017 decisions to refund VAT. The total amount of tax refunded to businesses is 21,687 trillion VND. Of which, the amount of VAT refunds for exports is 19,749 trillion VND, and the amount of VAT refunds in the investment sector is 1,726 trillion VND.
In the draft amendment of the VAT Law currently under review by the ministry, the Ministry of Finance proposes to amend, repeal, and supplement many new provisions on VAT refunds. These provisions are expected to help expedite the process of VAT refunds, which have been delayed in recent times.
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According to the proposed provisions, the conditions for businesses to be eligible for VAT refunds include: businesses engaged in the production of goods and the provision of services subject to a 5% VAT rate, if they have VAT input tax that has not been fully deducted and exceeds 300 million VND after 12 months or 4 quarters.
Investment projects eligible for VAT refunds are new investment projects, expanded investment projects, investment projects divided into multiple investment stages or multiple investment items. The regulations on VAT refunds for temporarily imported re-exported goods, pre-refund VAT, and post-audit for certain exported goods are eliminated as specified by the Tax Administration Law.
Supplement provisions on the responsibilities of tax authorities in handling VAT refund applications, with tax authorities responsible for the validity of VAT refund applications. Taxpayers are responsible for the accuracy, truthfulness, and completeness of VAT refund applications and any related violations of the requested refund amount.
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Businesses completing VAT refund procedures at the tax authority’s headquarters. (Illustrative photo: ST).
VAT refunds are one of the obstacles that businesses have faced for many years. In particular, during the 2022-2023 period, the investigation agencies discovered “phantom businesses” established to sell fraudulent invoices for VAT refunds. The tax authorities tightened the requirements for VAT refunds, leading to a slowdown in the refund process. Many businesses have complained that the tax authorities reduced the amount of VAT refunds, causing financial difficulties for the businesses.
In a recent policy dialogue on taxation and customs with South Korean businesses on February 29, the Korean Business Association in Vietnam also highlighted the drawbacks of VAT refunds. Many businesses have significant amounts of VAT refunds, mainly related to the refund provisions for investment projects.
At the tax policy dialogue conference at the end of December 2023, many businesses also raised concerns about the slow VAT refunds, especially for businesses exporting cassava starch and wood products. Mr. Pham Minh Khoa, Director of Global An Phat Trading Joint Stock Company, said that over the past 4 years, the company has carried out 32 exports of cassava starch. The company has paid taxes in full and has complete invoices and transaction documents, but the VAT refunds have not been processed yet. Mr. Khoa commented that the company is struggling to wait for the VAT refunds.
The General Department of Taxation stated that in response to the recommendations of businesses and to expedite the VAT refund process, a new refund procedure has been implemented. Tax authorities apply risk management criteria to classify VAT refund applications and select businesses with potential risks for inspection and post-audit after VAT refunds. The automation of the classification of VAT refund applications has been implemented throughout the tax industry. In 2023, businesses received nearly 18,000 VAT refund decisions, with a total amount of nearly 136,000 trillion VND.
The General Department of Taxation has established a working group to review and expedite the resolution of VAT refunds, working directly with tax departments, conducting specialized inspections and audits for tax officials involved in the inspection work.
