Wood processors have waited for over a year for what is thought to be over $250 million in VAT refunds, Photo: Le Toan

Last week, the General Department of Taxation (GDT) sent a dispatch to tax departments in all cities and provinces to accelerate the settlement of VAT refunds.

The departments will review the classification of VAT refund applications to ensure compliance with regulations, especially dossiers that have been classified as ‘checked first, refunded later’, to speed up the inspection and verification of the refund process.

For the VAT refund dossiers that the tax authorities have finished checking and determined to be eligible for a refund, the amount should be sent immediately. For dossiers of exporters being examined later than regulation deadlines, authorities shall determine the amount eligible for refund, if inspection and verification have not detected any fraud.

The GDT has requested that if after receiving the refund, the tax authority discovers incorrect declaration of tax amounts, the enterprise must return the overpaid tax and the late payment interest, face inspection by public security authorities, and take full responsibility for any violations. Tax departments should send more officials to check VAT refund dossiers, accelerate the process, and ensure that the performance of refunds is much higher than that in 2022.

Numerous wood, rubber, and cassava exporters have demanded action for some time because of the lengthy tax refund debt process. Especially in the wood processing industry, businesses have had to wait for over a year for $253 million of VAT refunds.

Throughout the country at numerous businesses, dump trucks and excavators are standing idle, and machinery and production lines are operating in moderation. At Halong 12-11 JSC, the tax refund amount is up to $6.3 million.

“Every month, we have to pay $4,200 of loan interest because of the delay in the refund,” said director Pham Thi Vinh. “If this lasts too long, our loans will become bad debt, leading to bankruptcy. Such an outcome is not our fault.”

Ty Long Commercial Wood Co., Ltd. has been waiting for over $5.5 million of VAT refunds for more than a year. The company cut 100 workers last year and expects to lose more. Machines that cost up to $10 million are working very little.

“There are 150 employees in the company, but currently each shift has only 30-40 workers because of slowed-down operations. Carrying on like this, the company may have to close,” said director Vu Van Tuyen.

According to the Association of Vietnam Timber and Forest Products (Viforest), in northern provinces, about 200 wood exporters are awaiting VAT refunds. In Quang Ninh province’s Cai Lan Seaport area alone, 11 businesses are waiting for a refund amount of more than $42 million.

“We are currently struggling with too many problems, our tax refund arrears are up to $717,000, and we haven’t received a penny. Employees have no work and the company is temporarily shutting down,” said Nguyen Thi Minh Hung, director at Ich Yen Export-Import.

According to the GDT, since 2022, tax departments have received more than 5,000 tax refund dossiers. The department said it has now responded to 4,900 of them.

The GDT explained that the delay in tax refunds is caused by many inspection procedures and a lack of coordination with other authorities and shareholders.

“Tax authorities do not have enough resources to conduct verification of all business households as claimed. We only verify questionable and high-risk businesses, in accordance with the Law on Tax Administration,” explained Nguyen Tien Trung, deputy director of the GDT’s Tax Audit and Inspection Department.

The Vietnam Woodchip Branch under the Viforest claimed that the 4,900 dossier figure cannot be likely. “The numbers reported by the GDT do not include dossiers submitted since the end of 2021 that have yet to be finished,” said Thang Van Thong, deputy head of the branch.

Viforest proposes amendments to the Law on VAT to remove certain items from being subjected to the tax. At present, the Ministry of Finance is drafting amendments to the law, to submit to the National Assembly (NA) in May 2024. Some NA departments have also received claims from the business community, and are working with the ministry and the GDT to find a resolution.