Removing difficulties in VAT refund for investment projects

	Many cases of taking advantage of invoices for tax fraud
	Synchronize solutions for detecting and strictly handling tax fraud
	Series of measures to prevent fraud in value-added tax refund

The Ministry of Finance is submitting to the Government on issuing a Resolution to remove problems in tax for taxpayers.

Enterprises face difficulties in VAT refund

According to the General Department of Taxation, the Ministry of Finance has recently received letters from many businesses on inconsistencies between specialized legal policies and tax policies, making it difficult for them in VAT refund for investment projects, especially large capital-intensive projects.

Tomonori Dairaku, Director General of Van Phong Electricity Co., Ltd., said that the company is investing in building Van Phong 1 BOT Thermal Power Plant with total investment capital of more than US$1 billion. The company was refunded VAT during the project investment phase. However, the VAT refund has stopped since the tax refund application was submitted in December 2020 due to problems related to the eligibility for VAT refund of the conditional business projects. The prolonged tax refund halt and the remaining refundable VAT of over VND900 billion have caused difficulties for the company.

"The refundable VAT amount is an important financial source to pay the costs of the project and the contractors. To ensure the progress of the project, the company had to use a necessary funds earlier than planned, leading to payment of high interest. Therefore, the company has sent a written request to the Government Office, the Ministry of Industry and Trade, and the Ministry of Finance to soon solve the VAT refund for the company," said Tomonori Dairaku.

Similarly, Trung Nam Construction Investment JSC has sent a request to the National Assembly Standing Committee, the Government and a number of ministries and agencies about difficulties in tax refund for energy projects. The company has implemented many investment projects in wind and solar power in Ninh Thuan, Dak Lak and Tra Vinh with total investment of nearly US$2 billion and remitted VND1,400 billion to the state budget.

To implement the projects, the company spent trillions of dong to buy equipment and according to regulations, the tax refund will be VND2,100 billion. However, according to the State's regulations, "the company’s projects listed in the conditional business lines that have not yet been granted an electricity activity license are not eligible for tax refund".

These are two of many businesses facing problems in tax refund due to specialized legal policies.

According to the General Department of Taxation, many conditional business lines are only granted licenses and certificates of eligibility for business investment after completing the investment such as electricity, seaport exploiting, and tourist accommodation services.

According to the provisions of Decree 100/2016/ND-CP of the Government, investment projects of conditional business establishments and business lines are not eligible for VAT refund when they do not fully meet the business conditions as prescribed in the Investment Law.

These regulations cause many difficulties for businesses because units that are under investment process are not licensed because the facilities, fire prevention and fighting conditions, operation permits have not been completed. Until the investment project has been completed and is eligible for a license, the project has been put into operation; VAT cannot be refunded according to Clause 2, Article 1 of Decree 100/ 2016/ND-CP.

Remove difficulties for businesses

Due to the difficulties that enterprises have to face, the Ministry of Finance has directed relevant agencies to study and work with relevant ministries and agencies to propose solutions.

In order to ensure consistency with the provisions of the Investment Law and remove difficulties for power projects and help the tax authorities fulfill their assigned tasks, after receiving the opinions of the Ministries of Planning and Investment, Industry and Trade, Justice and State Audit, the Ministry of Finance is submitting to the Government a Resolution to remove problems for taxpayers.

Accordingly, the draft resolution stipulates that, from the effective date of Decree 100/2016/ND-CP, conditional investment projects and business lines are entitled to a VAT refund when they meet the conditions specified in Points a and b, Clause 2, Article 10 of Decree 209/2013/ND-CP dated December 18, 2013 of the Government (amended, supplemented in Clause 6, Article 1 of Decree No. 100/2016/ND-CP dated July 1, 2016 of the Government) and have one of the following documents:

Business licenses for conditional business lines;

Certificate of eligibility for business in conditional business lines;

A permit issued by a competent state agency for business investment in a conditional business line or line of business or those who are eligible for conditional business investment without approval in writing as prescribed by law; business licenses for conditional business lines.

The draft also stipulates that the VAT refund policy for investment projects in conditional business lines will be applied until the Decree amending and supplementing Decree 100/2016/ND-CP dated July 1, 2016 of the Government takes effect.

The General Department of Taxation said that proactive coordination with ministries and agencies to review and amend policy inadequacies will create favorable conditions for businesses to receive VAT refund early, speed up the capital rotation and ensure the progress of investment projects.

Deploying VAT refund for goods of foreigners carrying out when leaving country

The issuance of the resolution will be more meaningful when the business community is struggling against the severe effects of the Covid-19 pandemic over the past two years.