What is the risk if the seller pays VAT then the buyer gets a refund?

The Vietnam Federation of Commerce and Industry (VCCI) has just commented on the draft. Decree detailing the implementation of a number of articles of the Law Value Added Tax (VAT). One of the notable contents in the comments is the issue of conditions for completing the tax return. VAT. Currently, the draft decree stipulates that buyers are only allowed to VAT refund when the seller has paid VAT.

VCCI said that, according to the feedback of enterprises, this regulation is inappropriate because currently the buyer pays VAT to the seller. After receiving this amount, the seller is responsible and proactive in paying this tax to the state budget. The buyer has no tools or authority to intervene or manage the seller's tax payment.

"The current regulation will make the buyer bear the entire risk of not being refunded, while it is not the seller's fault," VCCI assessed and said that only the tax authority has full tools for management, including a tax system to promptly receive information on tax declaration and payment from the seller; suspend invoices, request bank tax enforcement, requiring customs to coordinate in prohibiting tax debtors from leaving the country to collect taxes. Therefore, VCCI proposes to remove this regulation.

VCCI believes that the regulation that buyers can only get VAT refunds when sellers have paid taxes is pushing risks onto buyers.

About the conditions input VAT deduction Regarding non-cash payment documents, the draft stipulates that "there must be non-cash payment documents for purchased goods and services (including imported goods) of VND 5 million or more, including value added tax".

According to VCCI, this regulation causes difficulties for businesses, especially for small retail transactions or bonuses and direct support money for employees.

Businesses often have preferential policies and benefits for employees such as support for food, travel, and business expenses.

In these cases, the employee will advance cash for payment or pay in advance and transfer the invoice and documents to the business for later payment to the employee.

Furthermore, the company also gives cash incentives to groups of employees when they achieve good work performance and they will divide this bonus themselves.

"It is not feasible to ensure that all transactions over VND5 million have non-cash payment documents," VCCI shared, adding that current regulations require that purchases of VND20 million or more must have non-cash payment documents for purchased goods and services. According to businesses, they do not encounter any difficulties or problems when applying the above regulations.

To facilitate businesses when deducting input VAT, VCCI proposed that the drafting agency maintain the regulation on the non-cash payment threshold of over 20 million VND.

In addition, VCCI proposed to add export services to the list of subjects eligible for 0% VAT. According to VCCI, this service is eligible for 0% VAT because the export sourcing service is essentially a cross-border service, the service user is a foreign trader. The consumption and payment of costs are also done abroad.

Source: https://baoquangninh.vn/rui-ro-neu-nguoi-ban-nop-thue-vat-thi-nguoi-mua-moi-duoc-hoan-3356396.html