Hundreds of intermediary businesses have 'disappeared'.

Many items are high-risk.

Through a review of tax management information, the tax authorities found that some businesses claiming export tax refunds for cassava, wood, and forest products posed a high tax risk. Therefore, the tax authorities had to conduct inspections and verifications.

The tactics and actions of those involved in tax refund fraud mainly occur at the intermediate stages of goods trading.

For cassava and timber products, the tax refunds arise at the intermediate stage (due to direct purchase from forest farmers before processing or only basic processing, which are exempt from value-added tax). The intermediate stage mainly incurs management and logistics costs. Therefore, some individuals have taken advantage of the state's policies to commit fraud and misappropriate tax refunds.

Recently, the Ministry of Finance has directed the General Department of Taxation to coordinate with professional units of the Ministry of Public Security to detect and handle a number of cases of tax evasion and misappropriation of value-added tax (VAT) refunds, such as: the case of illegal trading of VAT invoices and tax evasion in Phu Tho; the cases of tax refund violations in Ninh Binh and Vinh Phuc ...

The General Department of Taxation also highlighted some typical fraudulent behaviors that have been identified.

These individuals exploit the lenient regulations on business establishment to set up businesses not for production or trading purposes, but for the purpose of buying and selling VAT invoices for personal gain and tax evasion. Accordingly, some individuals have established a chain of businesses (with relatives, family members, or hired representatives as legal representatives) to engage in circular trading, using illegal invoices to legitimize input costs for businesses seeking tax refunds.

The middlemen create fake invoices for the direct purchase of timber from farmers or livestock breeders, or buy and sell illegal invoices to deduct taxes and legitimize goods in order to avoid declaring and paying VAT (5%) at the intermediate trade stage.

Businesses claiming VAT refunds use illegal invoices (purchased from businesses with no production or business activities) or use invoices from businesses that have abandoned their business addresses or continuously changed their operating status in various locations to declare input VAT deductions and prepare VAT refund applications.

"The tactics and behaviors of those involved in tax refund fraud mainly occur at the intermediate stage of buying and selling goods," the General Department of Taxation stated.

A review of 120 businesses revealed that 110 intermediary businesses had "disappeared".

According to the General Department of Taxation, some intermediary businesses show signs of high risk, such as temporarily suspending business or absconding after issuing invoices to exporting businesses (F1). There are discrepancies in revenue and tax declarations between intermediary businesses; selling businesses (F2, F3,...) declare low revenue while buying businesses (F1) declare large deductible input VAT. Bank payments also show signs of risk, such as transactions occurring on the same day and withdrawals by the same person.

Through the review, inspection, and audit of tax refunds at 120 businesses, it was discovered that 110 intermediary businesses had abandoned their business locations, ceased operations, and were awaiting dissolution in the intermediate stage. These businesses claiming tax refunds had used input materials and purchase invoices from these intermediary businesses. These intermediary businesses, in turn, did not declare or pay taxes and could not prove the origin of the raw materials and goods purchased. The government has not yet collected taxes from these businesses, but is still required to process tax refunds for the businesses claiming refunds in the subsequent stage.

"This puts pressure on the tax authorities," the General Department of Taxation acknowledged, "Determining the amount eligible for tax refund must be based on verifying whether the purchase and sale of goods actually took place, leading to significant difficulties in processing applications."

Typically, in some cases, applications for cassava starch tax refunds were processed based on information from foreign tax authorities indicating that some Vietnamese businesses had transactions with foreign businesses that either did not exist in the foreign tax authority's database or existed but denied having transactions with Vietnamese businesses.

These are some tax refund applications that show signs of violating the law in order to misappropriate tax revenue from the state budget, negatively impacting legitimate businesses that comply with tax laws.

"After the tax authorities discovered some of the aforementioned risk indicators in the tax refund applications, many businesses proactively sent written requests to the tax authorities to cancel their refund applications," the General Department of Taxation stated.

The General Department of Taxation has directed local tax departments to further strengthen control over VAT refunds for high-risk export items, focusing on guiding tax authorities at all levels on criteria for identifying risks in refunds, defining the scope requiring verification for intermediary businesses, and providing guidance on verification and inspection procedures for VAT refunds. However, it is also necessary to promptly process VAT refund applications from taxpayers in accordance with regulations and tax management procedures.

Tax refunds totaled nearly VND 99,000 billion in the first nine months of the year . As of the end of September 2023, tax authorities had issued 12,721 VAT refund decisions with a total refund amount of nearly VND 99,000 billion.

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