Businesses are still tired of tax refunds

Verification of tax refund records is prolonged.

As a rubber exporting enterprise, Mr. Huynh Tan Thong - Director of Huynh Hai Nam Import Export Joint Stock Company (Tan Binh District, Ho Chi Minh City), indignantly recounted the extremely difficult and arduous process of applying for VAT refunds. Specifically, his company submitted VAT refund applications from December 2021 to April 2022, and it took the tax authority nearly a year and a half to verify the origin of the input.

Not only the invoices in the tax refund application, the tax authority also verifies all invoices of the enterprise. The invoices that can be verified are signed, the ones that are not completed are excluded, the figure is about 600 million VND. "In the process of verifying invoices, the tax branches are not connected with each other, so it is still quite manual, one tax branch sends to another tax branch via official dispatch and it takes a lot of time to receive feedback, some places do not receive any feedback for a whole year," said Mr. Thong.

Tax authorities need to promptly refund VAT to businesses

After the inspection, Mr. Thong's company's tax refund application of about 7.5 billion VND was transferred from Tan Binh Tax Department to Ho Chi Minh City Tax Department. However, after 3 months, the company still has not received any response on whether the tax refund is possible or not. Because this tax refund application has not been processed, the following applications are stuck, adding up all the tax that the company requested to refund to 23 - 24 billion VND.

"We have not received the tax refund yet, while in order to maintain production and business activities, the enterprise must borrow capital from the bank (currently, the enterprise's 3-month short-term loan is applying an interest rate of 7%/year), and still have to pay corporate income tax. Late tax payment is charged with late payment interest, but when the tax authority delays the refund, the enterprise is not charged interest. We do not know when we will receive the tax refund," Mr. Thong was upset.

According to this businessman, rubber exports have a profit margin of about 2%. The rate is very low but the level of competition in this industry in the world is currently very fierce. Therefore, businesses that pay 5% VAT and have not received a refund in the past 2 years are considered to have made a loss. "The business market is difficult, businesses are still looking for ways to cope but are very tired because of the delay in tax refunds. In addition, there are many regulations guiding tax refunds but tax officials are worried and do not dare to implement them. There have been many cases of tax fraud and tax appropriation that have occurred in the past but whoever makes a mistake will be punished. For businesses that are stuck and slow in resolving tax refunds, tax authorities should meet directly to have a dialogue to find a solution," said Mr. Thong.

In a recent tax dialogue, some businesses also angrily questioned the leaders of the Ho Chi Minh City Tax Department because VAT refund dossiers are taking too long, and they don't know when they will be processed. A company representative said they are preparing a dossier requesting a refund of VND16 billion in tax but have been waiting for several years, not knowing when the tax authority will process it. Another business said they have 10 dossiers requesting a tax refund. The tax authority issued a refund decision, thinking that "everything went smoothly", but the remaining 9 dossiers have not been processed yet. "The tax authority responded that they will process it, but we don't know when. Therefore, we decided to temporarily suspend operations, and only return to the market when we have the tax refund money," the leader of this business said in frustration.

Speaking to Thanh Nien Newspaper, Mr. Nguyen Tien Dung - Deputy Director of the Ho Chi Minh City Tax Department, said that after receiving feedback, the Tax Department has directed the units below to directly dialogue with the enterprises having problems; for qualified dossiers, after checking, the refund will be made immediately. For problems not related to risks, the tax authority will thoroughly refund the enterprises early.

Tax authorities may verify after completion.

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 appropriation of VAT refunds, such as the case of illegal trading of VAT invoices and tax evasion occurring in Phu Tho; tax refund violations in Ninh Binh and Vinh Phuc... Through that, a number of typical fraudulent acts were identified.

The tricks and behaviors of tax refund fraudsters mainly occur at the intermediate stage of buying and selling goods. Through the review, inspection and examination of tax refunds at 120 enterprises, it was discovered that 110 intermediary enterprises had abandoned their business locations, stopped operations, and were waiting for dissolution in the intermediate stage. Tax refund enterprises used input materials, used purchase invoices from intermediary enterprises without declaring taxes, not paying taxes, and could not prove the origin of raw materials and purchased goods. The budget has not yet collected taxes from these enterprises, but must resolve tax refunds for enterprises at the next stage. This is a pressure issue for tax authorities, determining the amount eligible for tax refund must be based on the results of verifying whether the purchase and sale of goods is real or not, leading to many difficulties in handling the dossiers.

Therefore, the General Department of Taxation has directed the Tax Departments of provinces and cities to further strengthen the control of VAT refunds for high-risk export items, focusing on guiding tax authorities at all levels on criteria for identifying risks in tax refunds, and zoning the scope of verification for intermediary enterprises. At the same time, handle VAT refund dossiers of taxpayers in accordance with regulations and tax management procedures.

Lawyer Tran Xoa, Director of Minh Dang Quang Law Firm, said that it is impossible for other VAT refund applications to have their refund period extended because of fraud cases. According to the Law on Tax Administration, the time limit for pre-refund inspection is 40 days. In case the refund application is not completed after this time, the tax authority can still verify it after deciding to refund the enterprise. If this is done, the time limit for processing the refund for the enterprise can be shortened.

Recently, the General Department of Taxation issued Official Letter 5004 providing guidance on the issue of tax refund settlement being overdue without any response from the competent authority. Accordingly, the Tax Department issued an official letter urging and requesting the competent authority to comment on the reasons for not being able to provide information; to complete the inspection and examination on time and to resolve tax refund dossiers in accordance with Circular 80/2021 of the Ministry of Finance.

According to this regulation, the tax authority shall issue a decision to refund the enterprise after the inspection period has expired. When there are responses and verification results from relevant agencies, the tax authority shall determine that the refunded tax amount is not eligible for a refund, and shall issue a Decision on tax refund recovery according to regulations and impose penalties and calculate late payment fees (if any).

The number of tax refund decisions has increased compared to before. As of November 17, the local tax authority has issued 953 decisions (an increase of more than 200 decisions compared to the end of September) with a tax refund of VND5,871 billion (an increase of VND1,219 billion compared to the end of September). In the last months of the year, the tax authority quickly processed tax refund applications for businesses, minimizing complaints.

Mr. Nguyen Tien Dung , Deputy Director of Ho Chi Minh City Tax Department

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