Tax refund for foreigners: Problems from the business of sales tax refund


The VAT refund program for foreigners has been officially implemented by the Ministry of Finance since August 2014 as guided in Circular 72/2014 / TT-BTC. In addition to positive results, the Customs of some provinces and cities said that some problems arose from the stage of sales tax refund.

Updated on : 30-07-2018

Tax refund for foreigners: Problems from the business of sales tax refund

Difficulties because businesses do not update information

Implementing the VAT refund program, the General Department of Vietnam Customs has developed Customs clearance procedures, customs inspections and supervision of goods brought by foreigners and Vietnamese residing overseas. The establishment of the "VAT Information Management System for Goods Purchased by Foreigners in Vietnam on Exit - VAT-RAS" to be implemented synchronously by VAT refunding businesses, Customs officers and commercial banks (banks which pay VAT refunds).

As reflected by the Ho Chi Minh City Customs Department, only Customs agencies participated in the system, so the Customs can only check invoices by paper presented by passengers without electronic invoices. Moreover, there were cases where invoices were hand-written, so the information in the bill was not clear at all.

According to the Hanoi Customs Department, through the implementation, the Noi Bai Customs Branch still encountered difficulties in the process of refunding VAT to foreigners. For example, clothes with general labels, missing labels, badges, missing red marks on invoices, or inaccurate contact numbers. This deficiency leads to difficulties for Customs offices in collating the actual goods to be refunded VAT with invoices made by the sales units.

According to the Da Nang Customs Department, in the process of implementing VAT refund for goods of foreigners, overseas Vietnamese on exit, it had difficulty in determining the sales companies’tax refunds when checking invoices and VAT declaration, resulting in a lot of time in processing VAT refund procedures for foreigners.

Similarly, the Khanh Hoa Customs Department said that most of VAT refund businesses did not update VAT invoices in the VAT-RAS system. Therefore, in the process of tax refund for passengers and cadres, the Customs Branch of Cam Ranh International Airport has to manually update the passenger information, information on the invoice into the system, causing loss of time and risks in the invoice verification. This has made it difficult to look up the information of the Customs office in processing VAT refunds for foreigners.

The Customs Department of Khanh Hoa also said that Customs officers at Cam Ranh international airport often encountered goods with a general code, without specifying the trademark, which caused difficulties in checking and comparing with the actual goods to be refunded VAT.

Better coordination is needed

The HCM City, Ha Noi, Da Nang and Khanh Hoa Customs suggested that the General Department of Vietnam Customs should discuss with the General Department of Taxation to request VAT refunding businesses to participate in the VAT-RAS system, so that the management work is tight and the information on the database on VAT refund for foreigners of the Customs offices is convenient. There should be a coordination regulation between the Customs department and the local tax department to exchange inquiries and information related to VAT refund.

There should be more clearly defined rights and obligations of enterprises participating in sales tax refund, as well as sanctions for cases where enterprises do not participate in updating information to the Customs office to have a basis for handling in advance.

The Khanh Hoa Customs Department said that the conditions for selecting tax refund merchants in Point b, Clause 1, Article 13 of Circular 72/2014 / TT-BTC are only regulated: "Implementing the accounting, invoice and vouchers according to the provisions of law to declare and pay value added tax by the method of deduction", which is not enough and it is necessary to add regulations. When issuing sale invoices, enterprises must specify the goods information on VAT invoices cum sheet VAT refund and update information on VAT-RAS system based on the above conditions.

The Hanoi Customs Department also recommends that tighter regulations on VAT refund conditions in Article 11 of Circular 72/2014 / TT-BTC should be applied for new or second-hand goods. In cases of loopholes, passengers entered into Vietnam and connected with the sales unit to receive the VAT refund invoice. Currently, the actual inspection of goods which are of great value from famous brands such as Rolex Watches, Cartier, Hermes, Chanel is difficult to determine whether they are real or fake goods.

There are also cases where goods are refunded when the goods are showing signs of use, the goods are not original labels without enclosed box. However, the dossiers and goods presented by passengers met the criteria for VAT refund, so the Customs officers still had to refund VAT to passengers.

Some contents of the program proposed by the Customs of some provinces and cities need to be upgraded and revised in an electronic manner so as to ensure automatic connection between the Customs, tax refund banks and VAT refund businesses.

Particularly for coordination work, units need to have a close cooperation with the border police and the aviation authorities to grasp the information of passengers in advance, thereby detecting the passengers on exit and entry during the day for tax evasion.

Source:  Customs news

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