MOF eases regulations for VAT tax refunds

Deputy Minister Do Hoang Anh Tuan said that 287 businesses across the country were waiting for tax refunds but there are both objective and subjective reasons for the delay. - Photo baogiaothong.vn

The ministry's decision is in response to complaints about tax refund delays caused by tax agencies, which is blamed for the shortage in businesses capital sources.

Deputy Minister Do Hoang Anh Tuan said that 287 businesses across the country were waiting for tax refunds but there are both objective and subjective reasons for the delay.

One of the reasons is that some enterprises owe the State budget but the State budget must also refund tax to these enterprises. However, under regulations previously issued, the two debts are not allowed to be offset, so enterprises are required to settle debts with the State budget before receiving tax refund.

According to Tuan, there are 20 enterprises facing this situation.

The ministry officially abolished the regulation via a document sent to local tax offices on Monday.

The ministry's leader also asked the General Department of Taxation (GDT) to check and inform local tax agencies within 6 working hours upon receiving their proposals for tax refund approval.

If they receive approval, the agencies would then issue a decision to refund tax to enterprises and update the tax payers database.

Local tax offices must take full responsibilities if they are slow in refunding tax to enterprises, Tuan said.

However, the ministry still requests localities to delay the tax refund if they detect any breaches of tax or customs regulations committed by companies or if tax payers are unable to prove the eligibility of the tax amount declared in their applications.

Tuan added that some businesses which were under scrutiny also have to be put in the waiting list.

Another reason for the tax refund delay is that some localities do not have enough funds to return to enterprises.

Nguyen Thi Tuyet, general director of the Nhat Tri Thanh Company which specialises in supply materials for the metallurgy industry, said the firm should have received VND38 billion (US$1.7 million) of tax refunds by the end of January, but due to a shortage of money, the local tax office delayed the refund until the beginning of February.

Nguyen Huu Quang, an official from the National Assembly's Finance and Budget Committee, said a delay like this was not rare.

Deputy head of central Da Nang City's tax authority Nguyen Dinh An said that there are five to six pending applications at his office because of capital shortages. Normally, due to the limited quota set for each locality, the GDT would approve the refund in accordance with the order of priority such as type of business, export and big investments.

Deputy Minister Tuan said that the ministry had enough resources for tax refunds nationwide. Currently, funds reserved for tax refund total VND3.8 trillion ($173 million). However, he did not deny the possibility that "This man has much to eat but that man finds no small piece."

He said HCM City now had only VND92 billion ($4.2 million) in the reserve while it needed VND800-900 billion ($36-41 million) for tax refunds. In contrast, the central Ha Tinh Province has VND1.1 trillion ($50 million).

To fix the problem, the ministry would remove quotas set for each locality and be more flexible in allocating funds for tax refunds.

Dinh Nho Hau, head of the Ha Tinh Province's tax office, said that the changes in tax refund regulations would help tackle difficulties for both local tax offices and businesses.

He also suggested that there should not be any discrimination among enterprises. Tax offices should repay tax to enterprises right after they complete procedures applying for the refund, regardless if they are big exporters or investors.

Over the past two months, 3,100 applications were sent to local tax agencies and all of the enterprises successfully reclaimed tax with total amount of funds worth VND13 trillion ($591 million). This year, the Government set aside VND98 trillion ($4.5 billion) for tax refunds.