According to the National Assembly Deputies of Lam Dong province, currently, the situation of the Covid-19 pandemic in Vietnam has been controlled, and international tourists and overseas Vietnamese visiting their homeland are increasing, but the per capita expenditure of international tourists to Vietnam is not high.

Therefore, it is necessary to encourage them to spend. The solution to this problem is to facilitate the VAT refund method for guests. Therefore, the National Assembly Deputies of Lam Dong province proposed that it is necessary to have regulations on VAT refund for international tourists and overseas Vietnamese right at the place where they buy goods to encourage them to increase their spending.

Inspecting luggage of passengers on entry and exit at Noi Bai international airport. Photo: Noi Bai Customs

In this regard, according to the Ministry of Finance, from July 1, 2014, the implementation of VAT refund for goods purchased by foreigners in Vietnam and brought with them upon exit has been specified in Law 31/2013/QH13 amending and supplementing a number of articles of the Law on VAT; Decree 209/2013/ND-CP dated December 18, 2013 of the Government detailing and guiding the implementation of a number of articles of the Law on VAT.

Pursuant to Law 31/2013/QH13, Decree 209/2013/ND-CP, the Ministry of Finance issued Circular 72/2014/TT-BTC dated May 31, 2014 providing for VAT refund for goods brought by foreigners, oversea Vietnamese upon exit (hereinafter referred to as foreigners) was amended and supplemented in Circular 92/2019/TT-BTC dated December 31, 2019.

The Ministry of Finance believes that, after the implementation of Circular 72/2014/TT-BTC, Circular 92/2019/TT-BTC has proven that the VAT refund policy for foreigners on exit is consistent with the international practice and Vietnam’s conditions and circumstances; promotes foreigners to increase their spending in Vietnam, thereby developing tourism, exporting goods, and promoting national culture; boosting international integration and contributing to perfecting the VAT policy.

Accordingly, the tax refund process for foreigners is as follows:

Foreigners (including foreigners, overseas Vietnamese) wishing to refund VAT on goods brought upon exit will buy goods at VAT refund shops and receive VAT refund, VAT invoices and tax refund declarations issued by the shops.

In which, in order to be identified as a VAT refund shop, the store management enterprise must submit an application to the tax office and a VAT refund shop location must also be stated by the enterprise in the application.

In addition, most VAT refund shops are domestic stores. In addition to selling normal goods, they provide goods subject to VAT refunds for foreigners.

When foreigners exit at the tax refund border gate and bring goods purchased at the VAT refund shops and wish to refund tax, they will present the VAT invoice and tax refund declaration to the customs office at the border gate for checking and determining the refunded VAT amount. In particular, the condition for tax refund is that the goods must be unused, still in their original condition, and the VAT invoice and tax refund declaration must be made within 60 days up to the exit date.

Finally, based on the confirmation of the customs office on the VAT invoice and tax refund declaration, the commercial bank as the tax refund agent (with a transaction office located at some international border gates) will refund the tax for foreigners on exit. The amount of VAT refunded to foreigners is equal to 85% of the total VAT amount of goods eligible for tax refund on the invoice. Tax refund agents are entitled to a tax refund service fee of 15% of the total VAT amount.

The Ministry of Finance also said that the implementation of VAT refund for foreigners is paid by a tax refund agent which is a commercial bank in an isolated area of ​​the international airport.

According to the Ministry of Finance, Vietnamese law has not provided for the payment of VAT refunds to foreigners right at the VAT refund shops as proposed by Deputies in Lam Dong province. The Ministry of Finance would like to note the above proposal to study and amend the provisions of Circular 72/2014/TT-BTC and Circular 92/2019/TT-BTC in accordance with regulations.