Proposal that businesses with 1 or 2 or more VAT rates are treated equally and fairly (Illustration photo)
The Draft Law stipulates in Clause 3, Article 15 on tax refund cases as follows: "Business establishments that only produce goods and provide services subject to a VAT rate of 5%, if they have input VAT that has not been fully deducted from VND 300 million or more after 12 months or 4 quarters, will be entitled to a VAT refund".
With this regulation, businesses with only one VAT rate of 5% will be refunded, while businesses with two or more VAT rates will not be refunded. This makes businesses worry about unfair treatment for businesses with two or more VAT rates.
For example, a business has product A with a VAT rate of 5%, product B with a VAT rate of 10%, the business has output VAT of 200 billion VND, input VAT of 300 billion VND, the VAT refunded is 100 billion VND.
According to the draft Law, enterprises will not be refunded in case there are 2 types of output VAT rates. This leads to the VAT amount not being refunded but being converted into a deduction, enterprises cannot account for it in the valid reasonable expenses because this is a receivable that is not clear when it will be collected, this amount of 100 billion VND per year will increase gradually over the years, causing difficulties for the cash flow of the enterprise. The consequence is that the cost and selling price of products cannot be reduced as expected, but there is also inequality when there may be other enterprises with only 1 type of tax rate of 5%, which is refunded.
Adjust regulations to suit business reality to avoid "fake profits and real losses"
Recognizing businesses' concerns about this regulation, Lawyer Nguyen Tien Lap , Arbitrator of the Vietnam International Arbitration Center, Executive Member of NHQuang Law Office and Associates, spoke with PetroTimes that the draft Law lists tax refunds in specific cases, but Article 15, Clause 3 stipulates that businesses only produce and trade in goods subject to 5% VAT. For example, in the fertilizer industry, a business that produces and trades in fertilizer from 100% imported raw materials and only has fertilizer as its output product will be eligible for a tax refund.
Lawyer Nguyen Tien Lap, Arbitrator of Vietnam International Arbitration Center, Executive Member of NHQuang and Associates Law Office.
However, in reality, it is rare for a fertilizer enterprise to only import raw materials with a tax rate of 5%, but it can flexibly change from importing to purchasing raw materials domestically or combining both importing and purchasing domestically. In addition, enterprises can also produce and trade many types of goods and services, so having many types of VAT rates is entirely possible, in which case, the enterprise will not be refunded.
“The concerns of enterprises are completely reasonable. Therefore, to be consistent with the business reality of enterprises in general and fertilizer enterprises in particular, the phrase ‘including’ should be added to the regulation in this case: “Establishments producing goods and providing services, including goods and services subject to 5% tax…”, Lawyer Nguyen Tien Lap proposed.
Besides, in terms of policy and legislative techniques, Mr. Lap said that if Article 13 of the draft Law lists prohibited acts, it means that if they do not fall under the prohibition, they will have to be completed.
“Meanwhile, Article 15 stipulates specific cases of refund. The unreasonable thing is that it both prohibits and allows. Because once the prohibitions are listed, it must be understood that what is not prohibited is allowed according to the principle of “choose to reject” instead of “choose to give” in the negotiations of the World Trade Organization - WTO”, Lawyer Nguyen Tien Lap explained.
Lawyer Nguyen Tien Lap's proposal is also the wish of many businesses. Businesses propose a plan to amend Clause 3, Article 15 of the draft Law regulating cases of tax refund: "Business establishments producing goods and providing services, including goods and services subject to a VAT rate of 5%, if the input VAT amount that has not been fully deducted is three hundred million VND or more after 12 months or 04 quarters, they will be refunded VAT."
This adjustment helps all businesses with 1 or 2 types of VAT rates or more to be treated equally and fairly, without the situation of "fake profit, real loss".
Furthermore, this also helps businesses have the conditions and motivation to continuously invest in development, innovation, product diversification, gain more resources to bring benefits to consumers and society, and contribute positively to the State budget revenue and the socio-economic development of the country.
Phuong Thao
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