Tax authority returns nearly $3 billion in VAT

This information was revealed by Nguyen Duc Chi, Deputy Minister of Finance, at a regular government press conference held on August 5.

Nguyen Duc Chi, Deputy Minister of Finance

The country's VAT refund system follows two modes – refund first, audit later and audit first, refund later, which are legally defined under the current Tax Administration Law. According to these provisions, the completion period for the refund first, audit later mode is set at six days, while the audit first, refund later process takes up to 40 days.

Reflecting on the VAT refund process, Chi disclosed that in 2022, tax authorities nationwide refunded over $6.25 billion based on nearly 20,800 refund decisions. The refund amount seen in the first seven months of 2023 stemmed from 9,800 decisions. In terms of the types of refunds, just over 20 per cent were post-audit refunds.

Responding to media queries regarding responsibilities in the case of delayed VAT refunds, Chi maintained that culpability would depend on specific circumstances, case-by-case evaluations, and an understanding of the reasons for the delay.

"Both the tax authorities and businesses need to examine and reassess each specific case. As government agencies, the tax authorities must review, scrutinise, and improve their operations to prevent future delays. We need to sift through our laws, procedures, and refund implementation methods to identify what can be improved and accelerated," he said.

In terms of solutions, the Ministry of Finance has proposed three measures to address the issue.

Firstly, tax authorities are employing IT, including AI, to build a comprehensive database of businesses. This will facilitate data analysis to identify and address high-risk companies proactively, reducing the number of firms that are subjected to the audit first, refund later process.

The second measure involves capacity building for tax administration personnel and businesses, aiming to enhance their understanding and compliance with tax laws. This is particularly relevant for VAT refund processes.

Lastly, the ministry stresses the importance of improving discipline and service conduct among tax officials.

"We have strictly stipulated adherence to legal processes and procedures, ensuring that businesses do not face unnecessary hurdles during VAT refunds. However, any enterprises found guilty of fraud during the VAT refund process will face severe penalties," concluded Chi.

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