Businesses are urging the government to adopt more stringent measures to expedite value-added tax (VAT) refunds due to prolonged delays in invoice verification and compliance challenges.

Speaking at the Tax Dialogue 2024 held last Friday, Nguyễn Thanh Phương, deputy general director of Fococev Vietnam, said the company has been awaiting a total VAT refund amounting to VNĐ529 billion (US$21.5 million) since 2018, despite having submitted all requisite documentation comprehensively.

The HCM City Tax Department has retroactively collected VNĐ36.7 billion, indicating that VNĐ127 billion cannot be refunded or offset. As of June 2020, the unresolved VAT amount has surged to VNĐ366 billion.

Fococev has initiated legal action against the Tax Department, with the HCM City People’s Court ruling to annul the tax recovery decisions and mandating the refund of the collected taxes.

While the Tax Department has refunded VNĐ36 billion, an additional VNĐ700 million is also set for refund; however, the VNĐ127 billion remains subject to an official court ruling.

The HCM City Tax Department has requested that Fococev submit complete documentation to facilitate the resolution of the outstanding VNĐ366 billion.

In addition, a representative from Sigma Co., Ltd. also expressed concerns regarding the delays in VAT refunds affecting foreign enterprises.

Experts have warned delays in VAT refunds are driving numerous Vietnamese timber companies towards bankruptcy, with refunds exceeding VNĐ6 trillion ($255 million) by 2023.

A representative from the Association of Vietnam Timber and Forest Products attributed the delays to the complex proof of origin (P/O) requirements, which may require up to 15 years for law enforcement to trace.

A representative of the Vietnam Chamber of Commerce and Industry (VCCI) said that P/O requirements impose significant burdens on firms that source from multiple suppliers.

A government survey revealed that over 50 per cent of respondents are grappling with cash flow issues, while 45 per cent are impeded by bureaucratic processes, with some firms awaiting refunds for nearly three years.

Recommendations

Experts have recommended permitting tax reimbursement upon contract signing and prioritising firms with commendable records, with refunds reviewed post-issuance.

A representative from Sigma Co., Ltd. proposed that the tax agency categorise refund applications and expedite the pre-refund process to assist businesses in sustaining their operations.

The National Private Economic Development Research Board has urged tax authorities to expedite refunds, proposing a three-month turnaround for exporters.

A VCCI representative warned that prolonged delays could result in business closures.

Senior economist Trần Đình Thiên recommended that streamlined procedures be implemented to facilitate access to tax refunds.

Mai Sơn, deputy director of the General Department of Taxation, said the Tax Dialogue 2024 serves as a critical forum for the tax authority to gather feedback on current tax policies and propose necessary amendments.

The dialogue aimed to address challenges and solicit recommendations from citizens and businesses regarding the implementation of tax laws, with a focus on invoicing, VAT policies, corporate income tax, tax incentives, personal income tax, and land-related levies.

The event targeted taxpayers from five southern provinces and cities, including HCM City, Bình Dương, Đồng Nai, Bà Rịa-Vũng Tàu, and Long An.