Many taxation and customs entanglements are causing ugly headaches for foreign-invested enterprises in Vietnam.
That was the message sent by Korean enterprises at a conference held by Vietnam’s Ministry of Finance (MoF) to update policies and administrative procedures in taxation and customs. At the conference, Deputy MoF Minister Do Hoang Anh Tuan and leaders of the General Department of Taxation and General Department of Customs answered questions about tax and customs policies in Vietnam.
Young Lee, deputy manager of Vina Pioneer industrial - which produces special polybags for garments, said that the MoF’s current regulations on environment protection tax for imported goods for processing were unclear.
“For such items like polybags, who will pay the tax, manufacturers or importers?” Lee asked.
MoF Tax Policy Department deputy director Pham Dinh Thi said for polybags used for packaging to export, both manufacturers and importers would no longer have to pay environment protection tax. “In the process of implementating the Environment Tax Law, tax policy makers found that these goods will be packed to make exported products which will not affect Vietnam’s environment,” Thi said.
He added that the government approved the MoF’s proposal to exempt tax for these items and released Decree 69/2012/ND-CP dated September 14, 2012 on this matter. Meanwhile, the foreign contractor tax is the problem for Daewoo-Hanel Electronics Limited Company.
Its general director Park Jong Hee said the company was borrowing capital from Korean Eximbank. However, under Vietnam’s regulations on foreign contractor tax, foreign contractors must pay a kind of tax for bank loans.
“According to the Double Taxation Agreement between Vietnam and Korea, does our company have to pay foreign contractor tax in Vietnam or not? If not, do we have to send documents to be tax free?” Hee said.
For this problem, Tuan said in case that a foreign-invested enterprise borrowed capital at a bank in its country with the state holding more than 51 per cent, it would not be subject the foreign contract tax in Vietnam.
However, Tuan said the company still had to submit the documents to implement the Double Taxation Agreement to enjoy tax exemption in Vietnam. Regarding tax administrative procedures, Bona Apparel Vietnam director Lee B.D wondered about value added refund procedures in cases of refund first, check later and check first, refund later.
According to current VAT regulations, in the case of refund first, check later, tax refund must be finished within 15 days after the tax agency received enough documents from enterprises. In the case of check first, refund later, the duration was 60 days.
However, according to the revised Law on Tax Administration which is expected to be approved by the National Assembly this October, from July 1, 2013, the duration for refund first, check later will be reduced to six from 15 days and for checks first, refund later from 60 to 40 days, said Tuan.
To be checked first refunded later, he added, enterprises must meet some criteria such as having enough time on business and production and have never violated on tax and customs regulations in Vietnam.