ANTD.VN - The Vietnam Banking Association (VNBA) has just sent a document to the Ministry of Finance and the State Bank, proposing to remove obstacles in value-added tax for letter of credit (L/C) services.
Previously, 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 was assigned to base on the provisions of the Law on VAT, the Law on Credit Institutions 2010 and related laws to collect VAT for L/C activities; consider and handle administrative violations of tax and late payment of VAT for L/C activities...
Regarding this direction, VNBA said it has received feedback from member banks about difficulties and shortcomings that could seriously impact the operations of the banking system if the Deputy Prime Minister's conclusion had to be implemented.
It's not the banks fault.
The Association said that regarding the regulations on VAT payment for L/C services, based on the provisions of the Law on VAT and documents guiding the Law on VAT, credit granting services are not subject to VAT. Accordingly, from 2011 to present, credit institutions do not collect VAT on fees related to the bank's payment guarantee commitment; only collect VAT on fees related to L/C payment services.
However, in 2019, the State Audit Office commented that: based on Clause 15, Article 4 of the Law on Credit Institutions 2010, which defines the provision of payment services through accounts including L/C, the failure of credit institutions to declare and pay VAT on L/C services is not in accordance with the provisions of the Law on VAT.
The General Department of Taxation then issued an official dispatch requesting local tax departments to review tax declarations of credit institutions in the area.
However, the Banking Association believes that the fact that from 2011 to now, credit institutions have not paid VAT on L/C fees of a credit nature is not the fault of the credit institutions, the credit institutions have not intentionally violated or intentionally evaded tax obligations.
Because the nature of L/C services does not change before and after January 1, 2011 (the effective date of the Law on Credit Institutions 2010). After the Law on Credit Institutions took effect, the Ministry of Finance did not amend the official dispatch guiding the payment of VAT; the General Department of Taxation still maintained the VAT policy guidance for L/C fees.
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Banks will be charged tax on L/C fees |
According to VNBA, the nature of VAT is an indirect tax. In case of additional payment, the credit institution must contact and collect from the customer. The customer will not agree because the bank's fee schedule has listed the L/C fee items related to credit granting that are not subject to VAT. Furthermore, many customers have completed the preparation of annual financial statements and audits.
In addition, since 2011, many customers have no longer had a transaction relationship with the credit institution or have dissolved/went bankrupt, so the credit institution cannot collect additional taxes but must record and monitor receivables in accounting books and financial statements.
Regarding invoice adjustment and additional declaration of tax declaration dossiers, when collecting VAT (if any) to pay to the State budget, credit institutions and enterprises will encounter difficulties in issuing VAT adjustment invoices, adjusting declared data, paying taxes, deducting taxes, etc.
On the part of credit institutions, the system of many branches and transaction offices spread across the country has undergone many changes, separations, and mergers since 2011, with a large number of transactions occurring over a long period of time and involving many currencies. Therefore, it will take a lot of time, effort, and resources to review, make statements, separate, calculate, and synthesize data with a huge data source from 2011 to the present.
Along with that, the principle of VAT is that when credit institutions declare and pay output VAT, business customers (mainly import enterprises) will be declared, deducted/refunded corresponding input VAT. Accordingly, the collection leads to a series of procedures and costs for the whole society to adjust invoices, data on declaration, tax payment, deduction/refund, increasing the operations of all enterprises, credit institutions and tax authorities.
Proposal to account for deductible expenses when calculating tax
After Document No. 324/TB-VPCP was issued, tax authorities in some localities requested credit institutions to pay VAT, causing confusion and anxiety among credit institution branches about the implementation of state policies.
Banks said that due to the tax collection arising from 2011 to present, the late payment penalty costs are very large (possibly double the amount of VAT payable), credit institutions have difficulty in accounting for tax payment sources for late payment penalties and administrative violation penalties (if any).
“Collecting and imposing late payment penalties on commercial banks with large amounts of money, which are not the banks’ fault, will be unfair to banks, especially those that have always complied with and complied with legal regulations; at the same time, if this policy is forced to be implemented, it will seriously affect the reputation and image of our country’s banking system, and cause a loss of confidence in the State’s policies and guidelines as well as the investment environment in Vietnam,” VNBA stated.
Based on the above-mentioned difficulties and shortcomings and the recommendations of credit institutions, the Banking Association proposes that the Ministry of Finance recommend that the Government allow credit institutions to account for the VAT amount for L/C activities collected from 2011 to present into deductible expenses when calculating corporate income tax because this tax is the customer's obligation that credit institutions have no basis/cannot recover.
At the same time, it is not necessary to issue adjustment/replacement invoices for invoices with incorrect VAT rates.
Allows credit institutions to declare and pay VAT centrally at the Head Office, 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.
No penalties for late payment of VAT or administrative violations.
Direct local tax departments not to require credit institutions to make adjusted declarations and pay additional taxes until there are specific instructions from the Ministry of Finance and the General Department of Taxation for uniform implementation nationwide.
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