Enterprises should pay attention to VAT refund regulations in Vietnam so as not to be penalized for late payment

Enterprises should pay attention to VAT refund regulations in Vietnam so as not to be penalized for late payment

If enterprises do not follow the principle of late payment penalty, the enterprises will abuse the value-added tax refund (VAT) until being forced to re-pay.

Recently, the Vietnam Association of Seafood Exporters and Producers (VASEP) reflected that enterprises exporting seafood products are entitled to VAT refund. However, after a while, because for some reason, the customer returns the goods, enterprises must carry out re-import procedures. At the same time, in addition to declaring and refunding the received VAT refund, they must also pay fines for late payment.

VASEP said that it is reasonable for enterprises to re-pay VAT refunds, but the late payment fine from the time of exporting the goods is not fair to enterprises.

In this regard, Mr. Dao Ngoc Son, Deputy Director of the Tax Accounting and Declaration Department (General Department of Taxation) affirmed that the tax authorities must comply with the provisions of the Law.

Specifically, according to Clause 3, Article 1 of Law No. 106/2016/QH13: If a business establishment has exported goods or services in a month or quarter, if the uncredited input value-added tax (VAT) is VND 300 million or more, it shall be refunded monthly or quarterly VAT.

0% tax rate

According to Article 9 of Circular No. 219/2013 / TT-BTC dated December 31, 2013, of the Ministry of Finance stipulating the conditions for applying a 0% tax rate on exported goods is required proof of payment for goods. Exported goods via banks and other documents as prescribed by law (this number of enterprises is fully entitled to input VAT).

For returned exported goods, foreign customers do not make payments to the business establishment in Vietnam, so the business establishment does not have bank-based payment documents for exported goods. Therefore, the 0% tax rate is not met on returned exports (ineligible for VAT refund).

Thus, if exported goods are returned by foreign customers or imported to their home country, such goods are no longer exported goods and are not eligible for VAT refund for exported goods according to regulations of law.

Enterprises need to make additional declarations in tax declaration dossiers to reduce refunded tax amounts and to return refunded VAT amounts corresponding to the value of returned exported goods.

In Clause 1.c, Article 59 of the Law on Tax Administration No. 38/2019/QH14 (effective from July 1, 2020), there are regulations on handling late payment interest in case the taxpayer filing additional tax returns reduce the amount of tax refunded.

How to collect the tax money legally?

Currently, to monitor and urge the collection of late payment interest, the centralized accounting system has set up a program that automatically calculates the amount of late payment after the enterprise has paid tax debts to the State budget.

According to experts, it is reasonable for enterprises to pay late payment interest because enterprises that are temporarily refunded first will also enjoy the bank interest. If the pre-refunded tax amount is sometimes up to billions of VND, the amount of money that businesses benefit is not small.

Enterprises should pay attention to VAT refund regulations so as not to be penalized for late payment.

There are some cases when enterprises deliberately take advantage of the state capital. Therefore, the penalty for late payment of 0.03%/day is lower than the automatically calculated bank interest rate which is fair for all parties.

Responding to the Covid-19 crisis

To support enterprises to overcome difficulties, the Ministry of Finance proactively submitted to the Government to issue a series of policies to extend tax payment, land rent, registration fee exemption, and reduction …, to help businesses have a single cash flow production and business maintenance.

Most recently, on March 31, the Government continued to promulgate Decree No. 44/2021/ND-CP guiding the implementation of deductible expenses when determining the taxable income of CIT to support the expenses of the organization for the activities of preventing and fighting against the Covid-19 epidemic.

Experts say that Covid-19 makes businesses face many common difficulties. The State has many supporting policies. However, enterprises still need to comply with the regulations and principles, properly and fully perform their obligations with the state budget, ensuring fairness and harmony of interests between enterprises as well as between enterprises and the state.

ASL LAW is the top-tier Vietnam law firm for doing business in Vietnam. If you need any advice, please contact us for further information or collaboration.


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