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VAT refund for foreigners on exit: how has the responsibility of management authorities changed?

13:34 | 02/03/2020

VCN- Compared with former regulations, the new regulations of VAT refund for foreigners in the Circular 92/2019/TT-BTC of the Ministry of Finance (Circular 92) have specified the competency and responsibility of management authorities in connecting and refunding VAT.  

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VAT refund for foreign passengers at Da Nang International Airport. Photo: Internet.

Entitlement and responsibility of customs authority

According to Clause, Article 8 of Circular 72/2014/TT-BTC (Circular 72), the Customs authority shall receive applications and request the Ministry of Finance appoint commercial banks as tax refund agents. However, when implementing provisions of Circular 72, the Customs authority has realised that the circular does not specify the responsibility of the leading authority to request the Ministry of Finance appoint international airports and seaports for VAT refund application. In addition, Clause 7, Article 8 of Circular 72 stipulates the Customs authority is responsible for building the electronic administration system of VAT refund for foreigners. However, it does not specify the management, operation, exploitation and use of the system by the Customs authority.

Therefore, to be consistent with regulations, the circular prescribes the responsibilities of customs authorities in presiding over and reporting to the Ministry of Finance for the appointment of application of VAT refunds at international airports and seaports, and supplements responsibilities of Customs authorities in building, administrating, operating, exploiting, using and handling errors for the electronic administration system of VAT refund for goods of foreigners and goods purchased by Vietnamese overseas on exit (VAT-RS system).

Regulations on presenting and checking VAT invoices and goods are specified in Circular 72. However, the circular only stipulates updated information on foreigners and their actual VAT refunds on the Customs database by the Customs authority. Meanwhile, the Customs database has been replaced by VAT-RS system. Thereby, the regulation for updating Customs database by the Customs authority is inappropriate.

When checking goods and VAT invoice, the Customs authority needs to verify information from the seller in case the goods are of high value and whether goods are purchased from the seller and are authentic goods or not. The circular does not specify that when the Customs authority checks the VAT invoice and detects suspicious signs or the invoice that has insufficient information, the Customs authority must exchange information with the seller and send the approved VAT invoice to the commercial bank.

Clause 13, Article 1 of Circular 92 supplements and amends Clause 19 of Circular 72 in the direction the Customs authority shall conduct physical inspection of goods at the counters where the VAT invoices and goods shall be inspected. The inspection will comply with risk management principles.

What is the entitlement and responsibility of the tax authority?

The inspection of VAT invoice and goods of the foreigners is stipulated in Clause 2 and Clause 8 Article 9 Circular, Customs must inspect whether the invoice issuer is the enterprise selling VAT- refund goods recognised by the tax authority or not. The basis for the Customs authority to refer is the list of enterprises selling VAT- refund goods to foreigner on the tax authority’s website. However, during the implementation of Circular 72, there is situation that enterprises are recognised by the tax authority but are not displayed on the tax authority’s website, causing difficulties for the Customs authority in tax refund.

In addition, enterprises selling VAT- refunded goods, publicised on the tax authority’s website has not been connected to the VAT-RS system. Therefore, to facilitate the Customs authority in tax refund, the circular supplements and amends the provision on the tax authority’s responsibility in receiving applications and appointing enterprises selling VAT-refunded goods in accordance with the provisions of Article 13 of this Circular.

The tax authority shall publish the list of enterprises selling VAT- refunded goods on the website of the tax department or the General Department of Taxation (if the tax department does not have a website) within the working day or not later than the next working day from the date of issuing the document recognising that the enterprise selling VAT-refunded goods and updated enterprise selling VAT-refunded goods to the VAT-RS system.

At the same time, when receiving information on the enterprise selling VAT- refunded goods from the Customs authority, the tax authority must check, compare and handle the information.

Responsibility of the State Treasury revised

Clause 2, Clause 5 Article 10 and Clause 5 Article 18 of Circular 72 provides the entitlement and responsibility of the State Treasury. However, the State Treasury only bases on the refund decision and refund order sent by the tax department to refund to the commercial bank, but does not participate in the tax refund for foreigners.

Therefore, Circular 92 abolishes Clause 5, Article 10 of Circular 72 and amends Appendix 11 attached to the circular. Accordingly, the responsibilities of the State Treasury and the provincial State Treasury shall monthly and annually compare and confirm the VAT refund accounting report with a tax agency at the same level.

By Dao Le/Ngoc Loan