Strict control of VAT refund to avoid fraud and loss of budget

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In the first 7 months of 2023, the tax agency has refunded tax to enterprises reaching VND 70,356 billion. Photo: Hoai Anh

Ensure the application of the right regulations

Over the past time, the Government and the Prime Minister have continuously issued documents guiding the settlement of VAT refunds in order to speed up the VAT refund process for businesses. Following the direction, the Ministry of Finance has requested the General Department of Taxation to urgently and drastically direct the tax departments in the work of VAT refund to ensure the settlement of tax refund dossiers for enterprises in accordance with regulations. In case there are problems, they will conduct a direct dialogue to take measures to solve and explain to enterprises.

Specifically, on July 4, 2023, the Ministry of Finance issued Document No. 6933/BTC-TCT to the Prime Minister to report on the management of VAT refunds. On July 20, 2023, the Government Office issued Official Letter No. 5503/VPCP-KTTH to the Ministry of Finance on reporting on the management of VAT refund. On August 2, 2023, the General Department of Taxation continued to have a meeting among relevant units to implement the Prime Minister's direction stated in Official Dispatch No. 5503/VPCP-KTTH dated July 20, 2023. This meeting offered a number of solutions to speed up and solve problems in VAT refund (about policies, the general direction of the whole industry, accelerating the implementation of IT application, speeding up the construction progress, and the implementation of a risk analysis application; upgrading and completing an application to track invoice verification results, etc).

Thanks to the drastic action, in the first 7 months of 2023 (up to the end of July 27, 2023), tax authorities nationwide issued 9,800 decisions on VAT refunds, equivalent to the refunded tax amount of VND 70,356 billion.

The Ministry of Finance said that, through the review of dossiers subject to inspection before tax refund, after-tax refund (first-time tax refund dossiers, taxpayers' dossiers within 2 years from the time of being handled for administrative violations for tax evasion; high-risk records according to risk management classification), the tax agency discovered a number of tax refund application dossiers with input as VAT invoices for goods and services purchased from companies that have high risk on taxes and invoices. Therefore, tax authorities need to take measures to check, verify and compare to determine the VAT amount eligible for a tax refund, strictly control to avoid fraud and loss to the state budget. For the tax amount that has the results of inspection and verification, the tax authority shall promptly refund the taxpayer according to the provisions of Article 34 of Circular No. 80/2021/TT-BTC dated September 29, 2021, of the Ministry of Finance, do not wait for the full verification to settle the refund for taxpayers.

Review to amend and supplement regulations on tax refund

In order to speed up the VAT refund, a series of solutions will be continued by the tax sector. Accordingly, on the one hand, the Tax sector has strengthened the review of tax refund mechanisms and policies, and on the other hand, comprehensively implemented and upgraded the IT application in tax refund settlement according to the newly issued Tax Refund Process; apply and deploy artificial intelligence (AI) to analyze big data (Big Data) in the buying and selling chain of enterprises, thereby detecting signs of fraud in tax declaration and payment of intermediary enterprises in the buying and selling chain; drastically directing tax authorities at all levels in the settlement of VAT refunds, requesting the heads of tax departments of provinces and cities to take full responsibility for the management of VAT refunds in the locality, not to prolong the backlog, causing frustration for businesses and people; hold dialogues at the provincial and city tax departments with associations and enterprises with long backlog VAT refund dossiers to clarify problems, proactively handle and solve problems; Assign the Policy Department to assume the prime responsibility for, and coordinate with relevant units in reviewing regulations on VAT refund to amend and supplement according to its competence or advise and propose competent authorities to amend legal documents on VAT law as prescribed.

Sharing about solutions to promote tax refund for businesses, Ms. Le Thi Duyen Hai, Director of Tax Declaration and Accounting Department (General Department of Taxation) said that the General Department of Taxation is reviewing to report to the Ministry of Finance to submit to competent authorities about the provisions of the Law on VAT and guiding documents on taxable and non-taxable objects, tax rates and conditions for VAT refund for exported goods and review regulations on tax refund procedures in the Law on Tax Administration and guiding documents, including: tax refund dossiers, tax refund file classification, tax refund dossier examination, tax refund processing time limit, inspection and examination after tax refund; Refer to international experience on VAT refund to ensure that the regulations on objects, conditions, dossiers and procedures for VAT refund are consistent and close, helping to timely refund VAT, avoiding creating loopholes for objects who take advantage of the policy to make profit and tax fraud.

In addition, according to Ms. Le Thi Duyen Hai, the tax sector continues to recommend that authorities related to business registration have strict regulations on identity comparison and identity verification when establishing businesses; After granting the establishment license, the enterprise has a post-checking regime to see if the conditions registered by the enterprise are exactly the same as that of the originally registered enterprise to control whether individuals or groups of individuals establish a business for the purpose of buying and selling VAT invoices for profit, tax fraud. Along with that, it is proposed to the competent state management agency to study amendments and supplements to policies and legal regulations to raise the level of sanction (administrative/criminal) for acts of illegal trading of invoices in order to ensure the strictness of the law.