Firms are clamouring for tough measures to accelerate the pay-out of value-added tax (VAT) refunds to lift them out of financial hardship.
Thang Van Thong, a representative from the Association of Vietnam Timber and Forest Products (VIFOREST), said delays in VAT refunds had driven scores of timber firms to the brink of bankruptcy. By 2023, delayed refunds in the sector had amounted to over VND6 trillion (US$255 million).
Delays in tax refunds were running rampant because tax reimbursement requires proof of origin (P/O), which is difficult for timber firms to obtain given the multiple layers of sellers in the supply chain. Origin tracing is so complicated a task that if passed to the police, Thong said, it would take them around 15 years to complete.
And the situation is not better for manioc exporters, who are required to disclose their partners' identities to be eligible for VAT refunds. The rationale behind this requirement is to prevent bad exporters from using bogus identities to commit tax evasion.
Vietnam Chamber of Commerce and Industry (VCCI) believed that the P/O requirement is too burdensome for firms because they buy feedstock from multiple suppliers and it is not an easy feat to trace their timbers back to every single one of them.
According to a survey by the Private Economic Development Research Board (Board IV), about 51 per cent of the respondents said they were facing cash flow problems and 45 per cent were hampered by red tape.
"And many firms have been driven into indebtedness because of delays in tax refunds. Some of them have not received tax refunds for almost three years," the survey said.
The VIFOREST representative called for the abolishment of the legal document that requires P/O as a prerequisite for tax refunds. He suggested firms be eligible for tax reimbursement upon entering into a commercial contract.
"Firms with good track records should receive tax refunds first and have the refunds reviewed later," Thong added.
Board IV urged tax authorities to accelerate the payment of tax refunds to free up money for firms. The board also suggested exporters be tax-refunded for a batch of products within three months from the date they export the batch.
VCCI Vice President Hoang Quang Phong said a delay of two to three years in tax refunds would put many firms out of business. He suggested firms be tax-reimbursed for a transaction as soon as the transaction is verified by the authorities.
Truong Thanh Duc, Director of ANVI Law Firm, said the current procedures for tax refunds are cumbersome because it takes at least one to two years for firms to get reimbursed from tax authorities.
He called for an ex-post approach to tax refunds to improve firms' cash flow. His suggestion goes as follows: all firms will be immediately tax-refunded and only those with suspicious activities will get their refunds reviewed by tax authorities.
Tran Dinh Thien, former head of Vietnam Institute of Economics, shared Phong's view. He called for simplified procedures for tax refunds to help firms get their money back from the taxman more easily.
In late May, Prime Minister asked Ministry of Finance to accelerate the pay-out of tax refunds to ease firms' financial problems. He said: "Ministry of Finance should chase up tax refunds to help firms and individuals". — VNS