Expeditiously Checking Tax Refunds, Avoiding Prolonged Backlogs

The General Department of Taxation recently sent Official Dispatch 2099/TCT-KK to tax departments of provinces and cities, urging them to promptly carry out value-added tax (VAT) refund documents for taxpayers. This is in response to growing public opinions about VAT refunds for some goods. The aim is to expedite the process of checking tax refunds and avoid prolonged backlogs.

Solving VAT refund problems for wood and rubber industries

From January 1, 2022 to May 17, 2023, the General Department of Taxation settled 61 VAT refund records worth VND163.34 billion for wood and rubber industries and did not complete 28 refund records with a requested value of VND110.33 billion, equal to 45.9% to total completed records (28 versus 61). Tax authorities contacted first-tier intermediaries (F1) for refunded companies to verify refund records. Among 58 records that needed to be verified with intermediaries, 50 records were involved in F1 intermediaries (accounting for 86% of total records) and eight records reached F2 intermediaries (accounting for 14%).

Inspections showed that 48 intermediaries abandoned their business addresses and suspended their operations. Tax agencies transferred their documents to the police. Especially, 30 F1 intermediaries suspended operations, 13 F1 companies abandoned their business addresses, four F2 companies suspended their operations, and one F2 companies gave up their business addresses.

In Ho Chi Minh City, 1,105 timber and woodwork companies abandoned their business addresses and suspended their operations (994 companies abandoned their business addresses and 111 suspended their operations), accounting for 14.5% of the country’s total number. Especially among them, 22 were prosecuted and probed for buying/selling illegal invoices.

Regarding an article in Tien Phong Newspaper issued on May 15, 2023, unsettled VAT refund records were mainly related to companies whose tax refund records were being checked and verified (foreign information and purchase cost). In 2022 and the first five months of 2023 (specifically as of May 17, 2023), the Ho Chi Minh City Tax Department transferred VAT refund records related to three companies to the police for further investigation, including two rubber companies.

Regulations on time limit for answering questions on VAT refund

The Prime Minister issued Official Dispatch 470/CD-TTg dated May 26, 2023 and the General Department of Taxation issued Official Letter 2099/TCT-KK dated May 26, 2023 to speed up VAT refunds to assist companies and people to deal with difficulties in business.

In Official Letter 2099/TCT-KK dated May 26, 2023, the General Department of Taxation requested leaders of provincial/municipal tax departments to take full responsibility for VAT refund management in their localities and direct tax refund to avoid frustratedly prolonged backlogs.

Regarding VAT refund records which were checked and determined the tax amount eligible for refund, they must be promptly refunded within the given time limit. As for VAT refund records that are being examined and verified, taxpayers must be notified of the record processing progress and the estimated refund time in a just, open and transparent manner. In case the tax amount has been inspected and verified, it must be expeditiously refunded to taxpayers as per Article 34 of Circular 80/2021/TT-BTC dated September 29, 2021 of the Ministry of Finance instead of waiting for full verification for starting settlement.

If tax refund files show signs of law violation and are transferred to the police, relevant taxpayers must be notified by writing, based on the conclusion of competent authorities for settlement in accordance with Article 34, Article 35 of Circular 80/2021/TT-BTC dated September 29, 2021 of the Ministry of Finance.

Regarding VAT refund files questioned or complained by trade associations and businesses, tax agencies need to organize an immediate dialogue with such associations and businesses from May 29, 2023 to June 2, 2023 to clarify their questions or complaints and make a summary report to the General Department of Taxation. They should quickly handle matters within their jurisdiction and report matters beyond their competence to the General Department for guided settlement.

The General Department of Taxation requested tax authorities at all levels to urgently review VAT declaration records filed by exporters and companies with ongoing investment projects to provide timely guidance for them to complete VAT refund documents. Tax agencies need to strengthen communications on policies on tax refunds and procedures under Circular 80/2021/TT-BTC dated September 29, 2021 of the Ministry of Finance so that taxpayers can actively prepare correct requests for VAT refunds.

By Huong Hau, Vietnam Business Forum