Counterfeit goods and virtual price affect the VAT refund policy

	Taxation Sector: Refunding VAT over 64,000 billion vnd in 9 months
	Hanoi Tax Department promotes to develop electronic tax systems
	Procedures for electronic tax refund should be more simplified

Customs officers at Tan Son Nhat airport guide procedures for VAT refund for passengers on exit. Photo: Thu Hoa

Afraid of counterfeited goods

At the seminar, the experts said that the VAT refund policy for goods taken by foreigners upon airport exit was a major policy of the Government, thereby contributing to promoting the on-spot export of goods and developing tourism. However, from 2012 up to now, the implementation of this policy has not been effective.The number of enterprises involved in selling VAT refundable goods and the refund to foreigners is still low. There are many causes, but the important cause is counterfeit goods, fake goods and goods without a listed price, making foreign visitors afraid of shopping.

In terms of law, Lawyer Nguyen Van Hau said, that on 30th April 2014, the Ministry of Finance issued Circular 72/2014 / TT-BTC regulatedthe VAT refund on goods taken by foreigners and overseas Vietnamese upon exit from Vietnam. The introduction of this policy aimed to implement a tax policy in line with international practices and reduce the risks of VAT management, especially the VAT refund for foreign visitors.

In terms of encouraging a demand in shopping and tourism development from VAT refund policy, Associate Professor Pham Trung Luong, former Deputy Director of Ho Chi Minh City Institute of Economics said, that shopping is an activity in the tourism value chain of tourists. Price and service are one of thematters for concern. Although the Ministry of Finance has issued a regulation on listing selling price on the market, the situation of the same goods with various prices in different shops has confused the tourists. The benefits for the tourist in shopping are not guaranteed when counterfeit goods and fake goods are rampant in the market. The silk of Khaisilk company in the recent times is a typical example.

Lawyer Dr.Bui Quang Tin, a specialist in economics and legal affairs, CEO of BizLight Business School, said that currently businesses involved in selling tax refundable goods could not sell goods, meanwhile enterprises, which could sell goods, were not involved in selling tax refundable goods. On the other hand, most of the popular shops in Ho Chi Minh City with international buyers such as, Lac Mai Handicrafts, where Vietnamese traditional long dresses belong to an individual, individual households and a family, they are not eligible for being recognized as a shop withVAT refundable goods, because these shops do not need tocomply with the policies on accounting, invoices and documents in accordance with the law, and so,do not need todeclare and pay VAT.

Along with that, businesses selling tax refundable goods still make basic errors on invoice when issuing them with a tax refund declaration, causing difficulties for the tourist withtax refunds.

Procedures for tax refund must be simplified

The procedure for tax refund for an invoice with a tax refund declaration should be simple, easy to implement, and thisis one of the solutions mentioned by the participants in the seminar forthe purpose of improving the efficiency of VAT refunds for foreign visitors on exit.

According to Dr. Dinh The Hien, Director of the Ho Chi Minh City Institute of Informatics and Economic Research, said that regarding the procedures, the ineffectiveness of the VAT refund policy was due to the lack of sense of standardising information on invoices to the customers of duty-free shops and the lack of participation into the online tax declaration service by many enterprises. Hence, the enterprises need to change their way of doing business by standardisingthe sales process, product, tax declaration, and promote their brand name and products through the program on sales of VAT refundable goods.

As a unit directly carrying out Customs procedures for tax refund for passengers on exit through Tan Son Nhat international airport border gate, Le Tuan Binh, Deputy Director of Customs Department of Tan Son Nhat International Airport statedthat the Department has implemented the program from 1st July 2012 up to now, andeach year the number of people and the amount of tax refunded has increased.Such as in 2013, 5,000 people got tax refunds with a total amount of 19 billion VND. In 2016, 5,000 people got atax refund with a total amount of more than 29 billion VND, and in 2017, more than 6,700 people implemented procedures for the atax refund with total amount of more than 31 billion VND

Although the number of people entitled to tax refunds and refunded tax was increasing yearly, the number of people entitled to tax refunds was still very low when calculating the rate of passengers on exit only accounting for 1 outof 1000.This means that only one person out of 1,000 people on exit was refunded VAT, according to Mr. Binh’s analysis.

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“Now, VAT refund byCustoms to passengers on exit is based on invoices passengers received from the VAT refund shops. Information for invoices is still inaccurate and insufficient to be eligible for tax refund. Therefore, in order to facilitate VAT refunds, modernizing tax refund documents and the electronic connection between shops with Customs banks is a requirement” – Mr. Binh suggested.