As of the end of February 2014, a total of 8,628 enterprises were refunded value-added tax (VAT). The total value of goods refunded was more than VND425 billion and the amount of the VAT refund was more than VND32.9 billion. This is the result of a 20-month pilot deployment of VAT refund to foreign visitors, stipulated by Decision 05/2012/QD-TTg. The figures show that this policy is consistent with international practice and helps enhance the competitiveness of Vietnamese goods. Currently, Vietnam has four VAT refund counters and two goods examination counters at Noi Bai International Airport and Tan Son Nhat International Airport. Four banks have joined the pilot programme, including Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), Maritime Bank, Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) and Bank for Investment and Development of Vietnam (BIDV). 69 companies have registered to take part in selling VAT-refunded goods with 268 stores.
VAT refund to exiting foreign visitors is a common practice in many countries in the world. As of December 2013, more than 7,400 foreign visitors had been refunded VAT of VND27.179 billion on a total value of goods of VND315.669 billion. Especially since early 2014, the number of foreigners doing tax refund procedures in tax refund points has been on a dramatic rise. VAT refund to foreigners helps raise the competitiveness of domestic goods, increase tourist arrivals, promote Vietnam's exports to foreign countries, and boost the popularity of national culture. Thereby, without doubt, Vietnam’s tax policies and laws are getting more integrated with the world. VAT refund to foreigners has so far achieved positive results though, this work still has unsettled obstacles, particularly propagation and dissemination of information.
Vietnam welcomed about 7.572 million international tourists in 2013 but a very few were refunded tax. Most foreigners knew this programme after they arrived in Vietnam. Hence, the purpose of pilot VAT refund of attracting tourists to Vietnam was not achieved. Not only foreigners, local companies still lack information about the programme; therefore, a very few companies registered to join. Some exiting foreign tourists show invoices for tax refund but they are not settled because of insufficient documentations or improper invoices.
This was partially because they did not know regulations. Some sellers still guided foreign visitors to apply for VAT refunds although they deliberately issued improper financial invoices as they only care about selling goods for profit. Thus, when their requests for tax refund were turned down, foreign visitors negatively reacted. Overall, this spoils the significance of tax refund programme, worsens the reputation of domestic enterprises and stains the image of Vietnam. This programme also had many other problems like management software, tax software, etc. Currently, VAT refund counters work around the clock, with one or two staffs at work every shift. However, in the long term, when the number of tourists applies for tax refund, the personnel will also need increasing. To deal with the personnel issue when the programme is officially applied, the General Department of Vietnam Customs proposes opening VAT refund counters at international seaports and airports, encouraging commercial banks to join the tax refund programme and allowing companies, without any limit to number, to sell tax-refunded goods. These changes will be supplemented by the General Department of Vietnam Customs to the new circular that replaces the Circular 58/2012/TT-BTC.
The new circular will expand the scope and subject of VAT refund. Tax refund will be also carried out in international seaports. Besides, Vietnamese people permanently residing in foreign nations carrying passports or equivalent papers issued by foreign competent authorities will also have their VAT refunded.
Hien Thinh
Vietnamese
