Complicated Tax Refund Procedures: Forcing Enterprises to Stop Exporting

Mr Nguyen Nam Hai, Standing Vice Chairman of Vicofa informed that for the last two years, coffee export has met difficulties, enterprises bought high and sold low and suffered continuous losses, many big enterprises went bankrupt and insolvent, overall bad debt in the sector accounted for about VND8,000 billion. In the 2012 - 2013 season, many difficulties in the Vietnam coffee sector led to the decrease in both production and value. Particularly, in that season, total coffee production for export reached about 1.4 million tonnes, accounting for US$2.8 billion, 10.5 percent lower in production and value than in the previous season. The price also was at the lowest level in four years. However, in the first eight months this year, Vietnam coffee exports were reduced more than 20 percent in production and value.

 

Coffee export is in difficulty and becomes more and more narrowed, however, the biggest worry of coffee enterprise community was the fact that documents required for the VAT refund were held too long and enterprises have no more resources to operate or are forced to close down. Some enterprises have not received tens of billions VND of VAT reimbursement, and are left on the verge of stopping exports in the next season.

 

According to Mr Vu Van Hai, Director of Ha Noi Production Services Import - Export Joint Stock Company (Haprosimex), the regulation of pre-control and post-refund of MOF makes coffee export enterprises become passive, because when their VAT refund procedures are unsolved for a long time, enterprises will fall into shortage of investment capital, and easily lose customers. Haprosimex itself from beginning of this year has stopped coffee export, Mr Hai explained: “VAT fraud has destroyed business environment in Vietnam, legitimate enterprises become victims. Identifying the difficulty of surviving in this destructive business environment, our company decided to stop exporting”.

 

As a victim of the “unsolved” VAT refund procedure, Ms Nguyen Thi Ngoc Mai, General Director of Processing Production and Packaging Import - Export Joint Stock Company (Packsimex) declared that if her company does not receive the VAT refund soon, her company will submit official documents to the Ministry of Industry and Trade (MOIT), Party’s Committee and People’s Committee of Ho Chi Minh City, as well as General Department of Taxation, with a request to stop coffee export. Therefore, employees would lose their jobs.

 

With a longer-term vision, Mr Le Tien Hung, Deputy General Director of the Daklak September 2^nd Import - Export Company Limited (Simexco), worried that if the State does not soon remove barrier of VAT refund procedure, Vietnam will lose traditional coffee import markets to competitors like Brazil or Indonesia. That means the efforts of many coffee export enterprises are wasted and Vietnam coffee brands will gradually disappear in international markets.

 

Mr Luong Van Tu, Chairman of Vicofa said that many other foreign enterprises are worried about VAT fraud in the next season. According to Vicofa, at the end of July 2013, the European Coffee Foundation (ECF) required relevant Vietnam authorities to investigate tax fraud in coffee trading, only then can members of this foundation can be assured to plan business for the 2013 – 2014 season.

 

Enterprises of the Vietnam Top 20 Club of coffee export enterprises have proposed that MOF postpone VAT refunds for a month (from November 2013) to review, or adjust from check first – refund last to refund first – check last, or use VAT of 0 percent for several types of coffee.

 

Receiving proposals of enterprises, Mr Tu said that Vicofa will collect these proposals and submit to the Ministry of Agriculture and Rural Development. Moreover, Vicofa will cooperate with other associations like Vietnam Pepper Association, Vietnam Cashew Association to confront with General Department of Taxation and the MOF to elaborate most appropriate solutions for VAT refund issue.