Korean businesses report delayed VAT refunds

Korean business representatives said they encountered difficulties with income tax reduction incentives and slow VAT refunds in some localities.

At the Dialogue Conference with the General Department of Taxation on the afternoon of February 29, Mr. Choi Youngsam, Korean Ambassador to Vietnam, commented that Korean enterprises have built a business foundation in many fields thanks to support from tax and customs authorities.

However, Mr. Choi informed that some businesses have reported difficulties related to previously committed income tax exemptions, which have now been canceled. Value-added tax (VAT) refunds have also been a problem for companies in this country recently.

In addition, they also face difficulties in regulating the inclusion of contractor contract money in the list of taxable income or double taxation of additional income from international transportation activities.

Delayed VAT refunds were raised by Korean companies in a dialogue with Ho Chi Minh City leaders in August 2023. For example, a food business complained that due to delays in obtaining land use rights certificates, it did not have enough documents to apply for a refund.

Mr. Choi Youngsam, Korean Ambassador to Vietnam, speaking at the dialogue conference on February 29. Photo: General Department of Taxation

In addition to tax refunds, Korean companies are also concerned about not being able to deduct corporate income tax if each employee's overtime hours exceed 200 hours a year. "This causes difficulties for many companies. In fact, they have to let employees work overtime to ensure orders due to lack of workers," said a representative of the Korea Chamber of Commerce and Industry (KoCham).

Responding at today's dialogue, Deputy Minister of Finance Cao Anh Tuan said that the ministry has received and processed hundreds of documents from Korean enterprises manufacturing in Vietnam. Many solutions to support and remove difficulties for enterprises have been proposed by this agency, which are "unprecedented".

Regarding the tax refund policy for expansion investment projects, according to Mr. Mai Son, Deputy General Director of Taxation, the advisory agency is considering and "is expected to be able to refund taxes to businesses".

Regarding overtime, Mr. Son reiterated the regulation that each employee is allowed to work no more than 200 hours of overtime per year, and a maximum of 300 hours for specific jobs. "Businesses need to find other solutions to harmonize regulations and ensure the health of workers," he suggested.

Deputy Minister Cao Anh Tuan shared at a dialogue conference with Korean enterprises on February 29. Photo: General Department of Taxation.

According to the Ministry of Finance, the budget contribution of Korean enterprises has increased annually, reaching nearly VND175,000 billion in the past 5 years. This figure accounts for 11% of the total budget revenue of FDI enterprises and 3% of the national budget.

As of January, South Korea was leading among 144 countries and territories investing in Vietnam with nearly 9,900 projects. Samsung was leading among South Korean corporations investing in Vietnam, with over 22 billion USD. This year, the group expects a 10% growth.

South Korean Ambassador to Vietnam Choi Youngsam said that the motivation to increase foreign investment in Vietnam is reflected in the expansion of investment by companies that have invested, rather than attracting new ones. That is, new businesses will observe the decisions of existing units to evaluate Vietnam's investment environment.

“They react very sensitively to uncertainty,” said Mr. Choi, arguing that an opaque and unpredictable tax administration would freeze investment.

Therefore, he recommended that Vietnam maintain a stable economic ecosystem for businesses to operate dynamically. This is also the key to expanding the tax base and ensuring stable budget revenue.

In this regard, Deputy Minister Cao Anh Tuan pledged to continue to improve policies and reform administrative procedures to create a more equal and favorable business environment for enterprises. For matters beyond his authority, he assigned units to record and report to the Ministry of Finance for consideration and submission to the Government.

Phuong Dung

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