Delayed VAT refund causes great damage to businesses

Photo caption — Producing wooden furniture for export to the EU market at WOODSLAND Tuyen Quang Joint Stock Company. *Photo: VNA*

The most difficult thing is to prove the origin of raw materials.

Mr. Ngo Sy Hoai - Vice President and General Secretary of the Vietnam Timber and Forest Products Association (VIFOREST) shared: In recent years, the wood industry has set a target of reaching 20 billion USD by 2025 and becoming a major exporting country after China, but in recent years, especially in the first 6 months of 2023, wood export output has decreased sharply.

There are many reasons for the difficulties of the wood industry, but one of them comes from the fact that the US market accounts for 55% of total exports, but this country applies many trade protection methods, initiates many investigations into plywood and kitchen cabinets, leading to a decrease in exports.

“In the context of difficulties piling up on difficulties, 6,100 billion VND of total VAT of wood processing and exporting enterprises has not been refunded, of which the wood chip industry accounts for nearly 2/3 for many reasons. This is only an estimated figure, in reality, the amount of tax that has not been refunded may double because many enterprises are afraid to speak up to tax and customs authorities, silently enduring. Although the Tax sector has actively proposed a number of solutions in the past, VAT refunds for enterprises still need more practical and effective solutions,” Mr. Ngo Sy Hoai emphasized.

Being on the list of wood chip exporting enterprises that have to wait for verification of the origin of domestically grown wood, many enterprises in Quang Ninh province have recently had to stop operating because hundreds of billions of VND in taxes at each enterprise are stuck and have not been refunded. "In addition to the system of machinery and equipment that has stopped operating, the enterprise also owes money to people who sell wood and money to buy chips from the enterprise," lamented the leader of a wood company in Ha Long, Quang Ninh.

According to Mr. Thang Van Thong, Deputy Head of the Vietnam Wood Chip Association, the local tax department bases on the dossiers submitted by businesses to request refunds, but those dossiers from 2021 and 2022 have not completed dossier 1, so dossier 2 cannot be submitted this year.

“When the timber is sold to an export enterprise, it has gone through many traders. With the current way of doing things in the Tax Department, if one of the traders cannot be found, the export enterprise will not be refunded the tax. Meanwhile, the purchase and sale goes through many traders, many provinces, if we check each company, each trader, we don’t know when the companies will be refunded the tax...”, Mr. Thang Van Thong asked.

Currently, many export enterprises are facing problems with traceability of raw materials that have not been resolved, such as the case of a rubber export company in District 1, Ho Chi Minh City. This company has been "suspended" for a tax refund of 50 billion VND for nearly a year, leading to the company having to stop exporting due to lack of capital.

"Wood export enterprises hope that foreign currency loans can be reduced to 3.8% to support enterprises to overcome difficulties and challenges and increase competitiveness. In particular, it is necessary to promptly carry out VAT refunds for wood industry enterprises when the amount of money to be refunded is very large; at the same time, the Tax sector needs to remove wood industry enterprises from the high-risk business stream in tax refunds because the main source of raw materials is from farmers' planted forests, so it is very difficult to meet the requirements of the Tax authorities...", the General Secretary of the Vietnam Timber and Forest Products Association suggested.

Deputy Secretary General of the Vietnam Federation of Commerce and Industry (VCCI) Dau Anh Tuan emphasized: The delay in VAT refunds has affected capital flow for production and business, causing huge losses for businesses.

"A domestic manufacturing enterprise with products exported to nearly 100 markets around the world sent a whole set of documents to VCCI to share that they were very miserable due to delayed VAT refunds. The tax refund was problematic because the Tax Department thought that a business in the chain of this enterprise had moved its headquarters or the headquarters was unclear, so they were put under review and had to be verified instead of refunding first and checking later as before. The verification process can take many months and it is unknown when it can be completed...", said Mr. Dau Anh Tuan.

According to the leader of VCCI, the company used to export 460 billion VND per month, but now the production activities of the above enterprise are stagnant, because the more exports, the more capital is stuck up to hundreds of billions, causing huge losses for the enterprise.

Need to clearly specify tax refund time

According to Associate Professor Dr. Dinh Trong Thinh (Academy of Finance), according to the law, tax authorities are responsible for fully refunding taxes, meeting standards, and following principles for businesses.

“Recently, some businesses, especially in the wood industry and some other industries, have been discovered to have intentionally committed fraud to appropriate tax refunds, so the management agencies must have time to inspect and re-determine. This is necessary. However, the law also clearly states the maximum inspection time. If it is necessary to extend this time, it can be 15-20 days at most, not a whole year. Regarding late tax refunds, the tax management agency must review, change and clearly stipulate how long the delay can be?

At the same time, it is also necessary to stipulate that even if a tax refund has been received, if fraud is discovered during a later inspection, the enterprise must be held responsible before the law, have the tax refund revoked and pay a fine. This is to increase the responsibility of enterprises," economic expert Dinh Trong Thinh suggested.

Many economic experts believe that: In reality, there are violations of tax refunds, but we cannot let businesses that comply well suffer losses. The General Department of Taxation needs to resolve the issue soon, otherwise, the Government and the National Assembly must resolve it to help businesses.

According to the representative of the Hanoi Tax Department, in the coming time, to speed up the tax refund process, the Hanoi Tax Department will immediately refund valid documents, and continue to quickly verify risky documents. Any cases that are beyond the authority to resolve will be reported to higher levels. "We will evaluate if there are risks. Any cases that must be transferred to the police will be transferred, and any cases that can be narrowed down, the contents that have been temporarily shelved, not yet completed, and the parts that have been clearly identified with full legal basis, we will refund to businesses," said Mr. Nguyen Huu Hung, Deputy Director of the Hanoi Tax Department.

Recently, the working group of the General Department of Taxation worked with the Hanoi Tax Department to review and resolve the remaining VAT refund dossiers. Through the review, the Hanoi Tax Department currently has 30 VAT refund dossiers that are still stuck and overdue by 40 days according to regulations. Meanwhile, most of these 30 dossiers have tax risks that need to be inspected, but businesses continuously ask to postpone the inspection time, some businesses requesting to postpone up to 8 times.

"There are some files that have been inspected four times so far, lasting nearly six months, but the Tax Department's inspection team has not been able to do anything at the enterprise. The enterprise has not been able to provide any files, the reason being that the director is absent, the accountant is on maternity leave, or on maternity leave...", said Ms. Le Thi Duyen Hai, Director of the Tax Declaration and Accounting Department, General Department of Taxation (Ministry of Finance). Failure to inspect also means that the files are suspended and the tax sector must explain. The representative of the General Department of Taxation suggested that the Hanoi Tax Department should boldly and frankly reject invalid files and files that do not provide sufficient documents.

In the first 6 months of 2023, the General Department of Taxation issued 8,510 decisions corresponding to the refunded tax of VND 61,093 billion, equal to 33% of the VAT refund budget for 2023 approved by the National Assembly. Tax refund management is implemented and strictly controlled, ensuring tax refunds to the right subjects and in accordance with the State's legal policies.

The General Department of Taxation continues to request heads of tax units to step up the direction and coordination of VAT refund management according to the directives of the Government, the Ministry of Finance and the General Department of Taxation; at the same time, request tax departments of provinces and centrally run cities to strictly implement the reporting of the results of the implementation of the General Department's direction on VAT refund in Official Dispatch No. 2099/TCT-KK dated May 26, 2023, Official Dispatch No. 2426/TCT-KK dated June 15, 2023 before 4:00 p.m. every Friday.

Tax departments continue to organize dialogues with associations and enterprises with long-standing VAT refund dossiers to clarify problems and proactively handle and resolve them within their authority. In case of problems beyond their authority, they must promptly report to the General Department of Taxation for guidance; strengthen propaganda work on tax refund dossiers and procedures so that enterprises can proactively prepare tax refund dossiers, create favorable conditions for receiving dossiers, and avoid dossiers that do not meet the procedures when sent to tax authorities. At the same time, promptly notify taxpayers of the progress and status of VAT refund dossiers in a transparent and public manner.

The General Department of Taxation also requested tax branches to strengthen inspection and post-refund examination of tax refund decisions subject to pre-refund and post-inspection, in order to promptly detect the use of illegal invoices, or illegal use of invoices, profiteering in tax refunds to misappropriate the State budget, and strictly handle them according to the provisions of law.

*Clip of the General Secretary of the Vietnam Timber and Forest Products Association recommending:

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