6.1 trillion VND of VAT is still "hanging"

According to preliminary statistics of the Vietnam Wood and Forest Products Association, processing and exporting enterprises have not been refunded 6.1 trillion VND of VAT. The woodchip exporters under the Wood Chips Association are about over 4 trillion VND (especially, this amount is 11 1,105 billion VND for large chip export enterprises in Quang Ninh province until the end of May 2023); The member enterprises of the Plywood Association have not yet received a tax refund of over VND 500 billion. The remaining amount of about 1.6 trillion dong belongs to pellet, processing, and exporting other wood products, which is at illiquidity risk. As a result, these enterprises lack the capital to manage and support workers in the scarcity of orders.

Regarding this issue, a Lam Thanh Hung Co., Ltd. representative shared that the Company faced many difficulties in VAT refunds because of the long tax refund period. As stipulated, the time for tax refund is 40 days from the application of the inspection dossiers. However, the tax refund dossier of the Company was extended to more than 6 months without receiving a formal decision. The reason is that there are too many inadequacies in tracing and verifying the origin of wood because, according to regulations, verification must be carried out to the afforestation household. Meanwhile, an export shipment of enterprises was purchased from several dozen afforestation households in many different localities. Therefore, the Company had to withdraw the application and temporarily postpone the submission of tax refund documents to focus on production and business to find output for new orders.

A representative of Thai Hung Port Joint Stock Company said that the Company had transferred 2 sets of VAT refund applications, of which 1 is worth 28 billion VND, and another is 26 billion VND, incurring VAT from January 2022 to May 2022 to the Tax Department of Quang Ninh province in August 2022. However, due to the regulations in Official Letter 633/TCT-TTKT dated March 7, 2022, on determining the origin of goods from F1, F2, and F3, the Company must postpone until now.

For the same reason, the enterprise's application for a VAT refund from June 2022 to March 2023 cannot be submitted to the Tax Department of Quang Ninh province. The total VAT paid by the Company and declared to the tax authority from January 2022 to March 2023 was VND 171 billion. Therefore, Thai Hung Port Joint Stock Company proposes to request a VAT refund from January 2022 until now with the same way of checking tax refund records as when there was no Official Letter 633/TCT-TTKT.

In addition, Thai Hung Port Joint Stock Company also proposes to check tax refund based on the result of customs inspection at the warehouse before exporting in terms of declaration compliance and tax obligation fulfillment (VAT, export tax...) and post-audit for payments from abroad. In case it is difficult to check, removing the VAT for the woodchip industry is recommended, and the VAT of the service and logistics part can be reduced or refunded.

If the VAT refund status prolongs without solutions, the Vietnam Timber and Forest Products Association proposes to remove the 10% tax on this item. Photo: NT

Reviewing obstacles to facilitate businesses

Mr Thang Van Thong, a representative of the Vietnam Wood Chips Association, said that introducing strict management measures in the VAT refund is reasonable and inconsistent Currently, according to the Circular 80/2021/TT-BTC of the Ministry of Finance guiding the implementation of several articles of the Law on Tax Administration, tax obligation is only traced to the taxpayers, but not to growers as stipulated in Official Letter 633/TCT-TTKT. On the other hand, the verification time is very long, and the local tax department cannot be in charge of it, and they must be a third unit, the police agency, to handle it.

Dealing with the situation, the Vietnam Timber and Forest Products Association proposed to review the obstacles in the current regulatory documents to remove difficulties for businesses, ensure financial flows for enterprises to sign new contracts, and avoid capital shortages to fulfil orders. For export enterprises that have contracts with commercial enterprises, VAT refunds are allowed because this is a legal, economic transaction that fully meets the tax refund conditions. If the enterprise is found to be violating the law, it is recommended to inspect/check and handle it following the law.

Currently, the regulations on management and traceability of forest products according to Circular No. 26/2022/TT-BNNPTNT are complicated, infeasible and time and cost if full verification is carried out. Therefore, the Vietnam Wood and Forest Products Association suggested that the tax authorities only focus on strictly controlling suppliers and businesses that issue invoices through the electronic invoice system. Enterprises found to be cheating on VAT refunds must be strictly handled to ensure the legitimate interests of wood product processing and exporting enterprises in compliance with the law and to p prevent risks in the tax field early.

If this situation remains prolongs without solutions, the Vietnam Timber and Forest Products Association proposes to remove the 10% tax on this item to avoid taking advantage of the VAT refund to cheat the budget, adversely affecting highly complied and genuine ones, or issue mechanisms and policies allowing to pay taxes on their behalf in the intermediate wood processing stage at the rate of 1.5% and allow them to account in enterprise costs.