Revising regulations on VAT refund for foreigners upon exit

	Smuggled goods which are confiscated or destroyed will not get VAT refund
	Not allow the enterprise to lodge complaints about tax refund
	Tax refund for foreigners: Problems from the business of sales tax refund

Noi Bai Customs officers inspected tax refund documents of foreigners. Photo:S.T

Revising obligations of retailers

To implement the VAT refund programme on goods of foreigners and overseas Vietnamese who take them upon exit, in 2015, the General Department of Customs built and put into use "VAT Information Management System for Goods Purchased by Foreigners in Vietnam on Exit - VAT-RAS". The above programme has the advantage of being implemented synchronously from VAT-free goods retailers and Customs agencies to commercial banks (banks pay VAT refunds).

However, until now, many retailers have not participated in this system, making it difficult for Customs agencies to monitor VAT refund for foreigners, check invoices and tax refund declaration, and inspect authentic goods and counterfeit goods. In addition, VAT-free goods retailers do not update information on goods and foreigner customers to VAT invoices and tax refund declarations on the system, so customs officers must do it manually, prolonging the time to handle tax refund procedures for passengers in exit. The system has no function of reverse access to determine that invoices submitted by foreigners are issued by the retailers.

In addition, VAT-free goods retailers change business locations or business name, but do not report to the tax agency and customs agency to update the VAT refund system for foreigners and the website of tax agency. Therefore, when looking up the list of VAT–free goods retailers on the system and the website of the tax agency, customs officers find the difference and refuse tax refund.

Accordingly, to solve the above problems, the draft Circular will add the rights and obligations of the retailers and supplement one provision on requiring the VAT-free goods retailers to participate in the VAT-RAS system and to update accurate information on the invoice and tax refund declaration to this system and require these retailers to report to the tax agency and the Customs agency on changes of business location and name, tax code, and VAT-free goods sale points.

Revising responsibilities and powers of Tax and Customs agencies

According to the General Department of Customs, Clause 1, Article 1 of Circular 72/2014 / TT-BTC regulates VAT refund at some international airport gates and international seaport border gates. The application of tax refund is decided by the Ministry of Finance in accordance with the actual management and effectiveness of VAT refund for foreigners. However, this Circular does not stipulate the responsibilities of agencies in charge of reporting to the Ministry of Finance on selecting international airports and seaports implementing VAT refund.

Moreover, because the VAT-RAS was build in 2015, some regulations are no longer appropriate

Therefore, in the draft circular, the General Department of Customs clarifies the responsibilities of the customs agency in reporting to the Ministry of Finance on deciding international airports and seaports implementing VAT refund. It is also adding a number of new provisions on the responsibilities and powers of the customs agency such as: receiving the applications of the provincial/municipal People's Committees and submitting them to the Ministry of Finance for selection of international airports and seaports. For the tax agency, Circular 72 stipulates the functions and powers in selecting and managing VAT-free goods retailers.

However, recently, when the Customs agency inspected whether retailers with invoicing are VAT-free goods retailers recognized by the Tax agency or not?, there was a situation that the retailers were recognised by the Tax agency but information about these retailers were not updated to the website of the Tax agency, making difficulties for the Customs agency in tax refund.

Accordingly, to facilitate the customs agency in implementing VAT refund, the draft Circular will add regulations to responsibilities of the tax agency, including managing VAT-free goods retailers in accordance with the law and posting the list of VAT-free goods retailers on its website.

Add regulations on printing, issuing and checking invoices

Circular 72 does not regulate the use of invoices and tax refund declarations printed from the VAT-RAS system Accordingly, to support foreigners, VAT-free goods shop and the Customs agency, it is necessary to add regulations on the use of invoices and tax refund declarations printed the VAT-RAS system.

For regulations on presenting and inspecting invoices and tax refund declarations and goods, Circular 72, does not stipulate that the Customs agency must keep records (photocopies) after certifying goods subject to tax refund (only commercial banks keep tax refund records - originals). This leads to a lack of documents for checking, causing difficulties for monitoring the tax refund records of foreigners.

To manage records easily, the General Department of Customs has included the content of keeping records (photocopies) after the customs agency confirms the goods are exempt from tax in the draft Circular.

Regarding invoices and VAT refund declarations, the VAT-free goods retailers have not filled full information in, making it difficult for the Customs agency to inspect goods to compare real and fake goods during the tax refund process.

Counterfeit goods and virtual price affect the VAT refund policy

To facilitate and limit the situation of counterfeiting in VAT refunds, the draft Circular will supplement provision that the invoice and VAT refund declaration are required to be filled with information on trademarks, symbols, origin, codes of goods and information on the phone number and email of the retailers for the Customs agency to contact to confirm the information related to the goods.