The implementation of anti-fraud of value-added tax refund for cassava exports in accordance with the law

Some enterprises exporting tapioca starch to China do not meet the conditions for VAT refund. Source: Internet.

In recent days, a number of press agencies have published articles about the proposal of the Vietnam Cassava Association to the Prime Minister due to problems related to value-added tax (VAT) refunds, including stopping implementing Official Letter No. 632/TCT-TTKT dated March 7, 2022 of the General Department of Taxation.

Responding to this issue, the General Department of Taxation said that the current tax policy has included preferential regulations in the agricultural sector. In particular, it stipulated items that were not subject to VAT for products of cultivation, husbandry, aquatic products, seafood have not been processed into other products or were only preliminarily processed.

To encourage traders and border residents to step up business and trade activities and reduce administrative procedures, the Government issued Decree No. 14/2018/ND-CP dated January 23, 2018 of the Government. Accordingly, the units can establish a written contract.

In case a written contract was not established, a list of goods should be made in order to facilitate border trade. However, in order to receive a VAT refund, Decree 14 also stipulated that the Law on VAT must be followed.

The Law on VAT and its guidance documents stipulated that in order to receive a tax refund for exported goods, enterprises must satisfy the conditions, including a contract sale of goods, customs declaration, invoice and proof of payment via bank.

According to the General Department of Taxation, following the State's regulations, most businesses have fulfilled their obligations to the state budget and VAT refund. However, some businesses took advantage of the State's preferential policies to forge documents, declare false invoices, etc. to appropriate VAT refunds. Some cases have been detected in coordination with the police force such as JUNMA Phu Tho Co., Ltd., Thu Duc Housing Development Joint Stock Company.

Tax authorities at all levels regularly strengthen the inspection and anti-fraud work of VAT refunds. Many solutions have been implemented in a timely manner. At the same time, tax authorities have actively cooperated with relevant agencies to verify and fight against violations and fraud in VAT refunds.

Recently, the tax agency noticed some suspicious signs in the VAT refund dossiers of some enterprises exporting cassava starch to China that did not meet the conditions for VAT refund.

Accordingly, one of the subjects of the import contract did not exist or has long absconded, the bank payment documents did not match the buyer's name, and the transfer through the border bank has not complied with regulations about payment conditions for tax refund.

The verification results from foreign tax authorities through the coordination mechanism between tax authorities showed that some enterprises importing tapioca starch in China no longer existed or had disappeared.

To ensure compliance with the law and to avoid losses to the state budget in the management of VAT refunds, the General Department of Taxation issued Official Letter No. 632/TCT-TTKT dated March 7, 2022 directing the internal units of the tax sector to perform tasks related to tax refund management.

Accordingly, it is required that tax departments check, review and compare businesses in the area that have declared and incurred sales transactions with businesses and organizations named in the verification documents from the Chinese tax authorities to take immediate professional measures.

In particular, clearly specifying the number of refund periods, the refunded tax amount, and the tax amount being requested for refund. If it is determined that there is a violation or the conditions for VAT refund are not satisfied, the unit should promptly handle the withdrawal of the tax refund to the state budget. If there were signs of law violations, they should consolidate the dossiers of violation to transfer to the police for investigation and prosecution.

For tax refund dossiers receiving verification results from foreign tax authorities (the import unit did not exist or did exist but does not accept the importation of goods by Vietnamese enterprises), the tax department identified signs of tax refund fraud, collected relevant documents, and sent to the police for investigation and handling. When there are conclusions from the Public Security Authority and relevant agencies, the tax department will process tax refund dossiers in accordance with regulations.

The General Department of Taxation requested tax departments to focus on reviewing and verifying risky contents related to export activities (customs dossiers, payment via banks, verification of information about import partners from overseas), or through inspection, detecting signs of violations of the law on tax and customs, the Tax Department should provide information about taxpayers' violations to the customs authority for inspection and supervision in accordance with regulations.

At the same time, requesting the customs authority to coordinate with the foreign customs authority in verifying, investigating and clarifying the issue.

Previously, on December 10, 2021, the Ministry of Finance held a meeting with the Vietnam Cassava Association (consisting of units under the Ministry of Finance, the General Department of Taxation, and the General Department of Vietnam Customs). At the meeting, the Ministry of Finance (General Department of Taxation) answered questions of the Vietnam Cassava Association. Accordingly, businesses that meet all the conditions and procedures for tax refund would be refunded from the state budget as prescribed by law.

Thus, it can be affirmed that the content of the direction in Official Dispatch 632/TCT-TTKT of the General Department of Taxation is consistent with the content discussed and directed by the General Department of Taxation at the meeting with the Vietnam Cassava Association relating to conditions, procedures for tax refund from the State budget.

This was also a professional guideline document in the tax sector in order to strengthen the management against fraud of tax refunds and was a professional measure to prevent fraud, profiteering in tax refunds, and prevent loss to the state budget and ensure the strictness of the law, creating a healthy competition environment among enterprises operating in production and business in good observance of legal policies.

The coordination with agencies and departments to verify the conditions and procedures in the inspection of tax refund dossiers is one of the professional measures of the tax sector to carry out tax management and inspect tax refunds to ensure they are in accordance with regulations.

Through verifying information on violations, the tax office has transferred information and dossiers to the police agency to request investigation and strict handling of violations in accordance with the law.