VNBA: Banks are confused and worried because they are not guided by the General Department of Taxation on declaring and paying L/C tax.

ANTD.VN - The Banking Association believes that the General Department of Taxation has not provided specific instructions on declaring and paying value added tax for L/C transactions, causing confusion and anxiety for credit institutions in implementing tax laws.

The Vietnam Banking Association (VNBA) said that it has just sent a document to the Ministry of Finance and the General Department of Taxation regarding the removal of obstacles in implementing value-added tax (VAT) payment for letter of credit (L/C) services.

Banks are confused because they are not guided.

Accordingly, the Banking Association said: On August 12, 2023, the Government Office issued Document No. 324/TB-VPCP announcing the conclusion of Deputy Prime Minister Le Minh Khai at the meeting on VAT for L/C activities, in which, the Ministry of Finance is assigned to collect VAT for L/C activities based on the provisions of the Law on VAT, the Law on Credit Institutions 2010 and related laws. At the same time, consider and handle administrative violations of tax and late payment of VAT for L/C activities...

After that, the Association sent an official dispatch on November 9, 2023 to the Ministry of Finance reporting difficulties and obstacles and proposing a number of solutions to implement the conclusion of the Deputy Prime Minister.

However, on November 30, 2023, the General Department of Taxation issued Official Dispatch No. 5366/TCT-DNL to commercial banks and foreign bank branches in Vietnam (TCTD) and on December 18, 2023, continued to issue Official Dispatch No. 5472/TCT-DNL to the Banking Association.

The Banking Association said that in the above documents, the General Department of Taxation requested that credit institutions have the obligation to declare and pay VAT for L/C transactions in accordance with the provisions of the Law on VAT, the Law on Credit Institutions 2010 and related laws... without specific instructions, causing confusion and anxiety for credit institutions in implementing tax law regulations.

Currently, the Banking Association said that it continues to receive many complaints about difficulties in implementing VAT payment for L/C transactions.

In particular, regarding the source of tax payment and accounting for tax payment, the Association believes that in essence, VAT is an indirect tax, the taxpayer is the customer. In case of having to pay additional VAT on the letter of credit that has arisen, the Bank must contact and collect it from the customer.

However, collection from customers is not possible because the customer does not agree to collect, no longer has transactions with the bank, or the customer has dissolved/goes bankrupt/no longer exists...

Banks are charged L/C tax

Regarding the additional declaration of tax records, according to the Association, the deadline for additional declaration according to the guidance of the General Department of Taxation is understood to be from the effective date of the Law on Credit Institutions 2010 (January 2011).

However, according to current regulations (Clause 1, Article 47 of the 2019 Law on Tax Administration), the deadline for taxpayers to declare and pay additional taxes is 10 years from the deadline for submitting tax declarations.

Thus, the Association believes that banks will start declaring and paying additional VAT on L/C activities from November 2013 (calculated from the deadline for submitting VAT declarations for November 2013), not from January 2011.

Regarding the declaration and payment of taxes at units, VNBA believes that VAT is a monthly tax, so banks must make additional monthly declarations. This leads to a huge amount of work for banks due to having to review records and data over many years because the units have also gone through many separations and mergers.

In addition, the number of additional declarations and detailed lists as prescribed by the units that incur the obligation to pay VAT on L/C activities is very large. Vietcombank alone must declare 120 additional monthly tax declarations for 1 unit. Accordingly, 126 units of this Bank will have to declare 15,120 additional tax declarations.

Regarding VAT calculation: According to the State Audit recently, when conducting audits at some banks such as Vietcombank, Vietinbank... it is stated that: Prepayment fees (domestic L/C, export L/C, EPLC) are essentially loans so they are not subject to VAT;

For UPAS L/C products, banks only benefit from the difference between L/C fee revenue (collected from customers) and costs (interest paid to the sponsoring bank and contractor tax payable) and are allowed to offset fee revenue with interest paid to the sponsoring bank and contractor tax).

Therefore, with the figures for 2020, 2021, 2022, the State Audit excluded these fees when calculating additional VAT and some banks paid additional VAT according to the figures calculated by the State Audit (because the State Audit's reports are mandatory).

Proposal to remove obstacles

From the above difficulties and shortcomings, the Banking Association proposes that the Ministry of Finance recommend to the Government:

Firstly, allowing credit institutions to start declaring and paying additional VAT for L/C activities from the VAT period of November 2013 in accordance with the provisions of the Law on Tax Administration 2019.

Second, allow credit institutions to account for the VAT amount for credit activities collected from 2013 to present as extraordinary expenses in the year of implementation and to account for a reduction in profit because this tax is an obligation of the customer that the bank cannot recover from the customer.

Third, allow credit institutions to declare additional VAT annually, without having to declare and adjust the declaration each month.

Fourth, allow credit institutions to pay VAT centrally at their headquarters, without having to declare and pay tax to the local tax department. In case it is necessary to regulate to the local tax department, the General Department of Taxation will regulate to the local tax department.

Fifth, no penalty for late payment of VAT or administrative violations will be imposed because this is not the fault of credit institutions, ensuring the rights of taxpayers according to Clause 11, Article 16 of the 2019 Tax Administration Law.

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