Rights and obligations of commercial banks and enterprise operating goods eligibled for VAT refunds

VCN - In order for the relevant laws to be effective, in Circular 92/2019/TT-BTC amending and supplementing a number of articles of Circular 72/2014/TT-BTC on refund of Value Added Tax on goods of foreigners and overseas Vietnamese taken with them upon exit which will take effect from July 1, 2020 (referred to as Circular 92) specifying rights and obligations of commercial banks and enterprises operating goods eligible for VAT refunds.
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Customs officials of Tan Son Nhat International Airport Customs Branch implemented VAT refund procedures for goods of foreigners taken with them upon exit. Photo: Thu Hòa

For sales enterprises

According to the General Department of Vietnam Customs, the authority in charge of drafting Circular 92, the VAT refund management system for goods of foreigners purchased in Vietnam taken with them upon exit (VAT-RS system) was put into operation since 2015 by the Customs authority has no function of tracing back to determine that the foreigner's invoice presented is correct as produced by the enterprise.

In addition, when an enterprise operating goods eligible for VAT refund changes the sales location and name of the enterprise but has not reported to the tax and customs authority for updating the VAT refund system for foreigners and the website of tax authorities yet. Thus, when looking up the list of enterprises eligible for VAT refunds on the VAT refund system for foreigners and the tax office's website, it did not match the invoice and tax refund declaration. So, the border gate customs authority declined to refund tax.

For synchronizing and detailling regulations of these provisions in order to be suitable with reality, in Clause 3, Article 1 of Circular 92, Clauses 2, 6, 7 and 8 of Article 6 of Circular 72/2014/TT -BTC in the direction of adding rights and obligations of the enterprises operating goods eligible for VAT refund in filling full information into the VAT-RS system. At the same time, dealing with case of system failure and management, use of invoices and electronic tax refund declaration as prescribed in Clause 1, Article 1 of Circular 92 amending and supplementing Clause 3, Article 14 and Clauses 2 and 3 of Article 15; Clause 1, Article 18 of Circular 72/2014/TT-BTC.

Accordingly, Circular 92 stipulated that enterprises registering the right address and take responsibility before law for VAT refund registration. In case of adjustment or termination of selling goods eligible for VAT refunds, they must make adjustments or termination as in Article 14 of Circular 72/2014/TT-BTC.

Circular 92 also specified the conditions, dossiers, and procedures for selecting enterprises operating goods eligible for VAT refunds. Accordingly, enterprises operating goods eligible for VAT refunds to be selected must meet the following conditions: They must have head offices, branches and shops of enterprises; location of shop for enterprises; they must comply with the regulations on accounting, invoices and documents as prescribed; VAT declaration and payment following the deduction method.

In addition, Circular 92 also amended the provisions in Clause 3, Article 14 of Circular 72/2014/TT-BTC in the direction of applying strict sanctions for enterprises that violate the regulations. Depending on the seriousness of violations, the tax authority would handle from the administrative sanctions to the termination of the sale of goods eligible for VAT refunds.

For banks participating

On July 24, 2017, the General Department of Vietnam Customs issued Decision 2377/QD-TCHQ regulating the standard of messages exchanged between the General Department of Vietnam Customs and commercial banks and enterprises in the system of VAT refund for foreigners. However, the VAT-RS system was only designed to exchange information with commercial banks. In particular, commercial banks had to design compatible information indicators to exchange information with Customs authorities. So far, no banks have joined the VAT-RS system of the General Department of Vietnam Customs.

Therefore, in Clause 4, Article 1 of Circular 92 supplemented that commercial banks are granted accounts to access and participate in the VAT-RS system as prescribed.

Also, Clause 11, Article 1 of Circular 92 specified conditions and procedures for selecting commercial banks as VAT refund agents. According to the General Department of Vietnam Customs, the documents provided by that the commercial bank for selection must be available documents issued by competent state authorities.

Circular 92 specified clearly that commercial banks must perform checking boarding/ship boarding cards; invoice and VAT refund declaration; check the system of information on people on exit, goods and confirm of the customs authority agreed to refund tax and the amount of tax refund; send VAT invoice information on the VAT-RS system to the Customs and Tax authorities.

In case the information about the name of passenger on the boarding card was not consistent with the information on the invoice and tax refund declaration that was checked and verified by the customs authority, the commercial bank should exchange and verify with the customs authority. If the information exchanged with the Customs authority did not match the information on the boarding card, the commercial bank would refuse to refund the tax and notify on the system.

By Đảo Lê/Thanh Thuy

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