Preventing fraud of VAT refund

Tax sector will develop long-term and short-term plans to stop the fraud of VAT refund. Source: Internet

Drastically implementation

Implementing the request of the Ministry of Finance on combating VAT refund fraud, the General Department of Taxation has developed and synchronously implemented the solutions to minimize VAT refund fraud within the sector.

Accordingly, the General Department of Taxation has established Steering Committee 1385 to strengthen the inspection, examination and fight against VAT refund fraud. Steering Committee 1385 has developed a plan and directed the whole sector in the synchronous implementation of inspection and examination of enterprises showing signs of high risk in VAT refund.

According to statistics of the General Department of Taxation, in 2021, in the process of receiving and processing tax refunds, tax authorities at all levels have announced their refusal to refund VND18,673 billion, accounting for 9.8% of the proposals for tax refund.

For inspection and inspection after tax refund, 63 tax departments have carried out 5,240 inspections and audits after refund, equivalent to a total refund of VND43,712 billion. The total amount of tax refund and penalty is VND811 billion. In particular, the amount of tax refund is VND640 billion; the penalty is VND170 billion. Since then, VND311 billion has been paid to the state budget.

According to the Tax Audit and Inspection Department, the situation of businesses taking advantage of tax policies to appropriate VAT refunds is very complicated with sophisticated tricks and involves many locations. The inspectors of the General Department of Taxation and the Ministry of Finance have discovered many businesses showing signs of fraud with billions of VND in VAT refunds.

Step by step digitization

In order to prevent and put an end to fraud in VAT refunds, the General Department of Taxation requested long-term and short-term plans.

In the immediate future, tax departments need to actively promote the review and detection of cases where enterprises showing signs of tax refund risks in order to implement professional measures to prevent violations remotely and promptly report to the General Department about the violations which have complex nature involving many localities or have a systematic nature.

Along with that, the units need to strengthen inspection, especially for industries such as tapioca starch, wood chips, cashew products at some tax departments.

To verify the origin of goods and invoices of enterprises, the General Department of Taxation requested tax departments review and assess risks on the basis of criteria in order to select businesses showing signs of risk; arranging resources for coordination, review and verification of enterprises providing goods and services for enterprises which are subject to tax refund inspection and examination; researching the experience of some tax departments about key supervision.

For localities that are implementing the pilot of e-invoices, it is necessary to research to propose solutions to identify risks in tax refund, thereby making recommendations and solutions.

At the same time, the Tax Audit and Inspection Department must chair and coordinate with units of the Tax Department to immediately review and inspect risky cases.

Furthermore, the Policy Department and the Legal Department are assigned to research and propose a legal basis for stopping VAT refunds pending verification while purchasing, importing goods, money transfer transactions, customs declaration, verification from tax authorities of other countries and agencies; processing and recovering tax refunds for cases where tax refunds for purchases made through intermediaries that have stopped and left the business address.

Recently, the General Department of Taxation has also developed a draft tax refund process to replace the current tax refund process. According to the General Department of Taxation, the construction of a new tax refund process is based on the automation of work steps in order to ensure the control of the tax refund settlement progress, individual responsibilities, and control over the work of tax refund settlement.

The process must have a connection between other tax management processes based on risk management, application of inspection and examination, and application of internal inspection in the work of tax refund control.

Ms. Le Thi Duyen Hai, Director of the Tax Declaration and Accounting Department, said that the draft guidance this time was clearer and more specific for the step of receiving documents via electronic transactions, ensuring the digitization of the work steps; cataloging the status of tax refund dossiers, error codes, assignment of processing, settlement of tax refund dossiers, etc., thereby supporting tax refunds.

The General Department of Taxation hoped that this amendment of the VAT Refund Process would help to process tax refund documents quickly, but also ensure the accuracy and correct subjects, contributing to preventing loss of state revenue.