Công văn 18832/BTC-TCT

To: Departments of Taxation of provinces

The Ministry of Finance have recently received enquiries from some Departments of Taxation and enterprises regarding the implementation of Dispatch No. 10492/BTC-TCT dated July 30, 2015 on improvement of VAT refund management and Dispatch No. 13822/BTC-TCT dated October 02, 2015 on legitimate VAT refund management. The Ministry of Finance hereby provides instructions below:

1. Instructions on criteria for determination of prioritized tax refund specified in paragraph 3 of Dispatch No. 10492/BTC-TCT and paragraph 3 of Dispatch No. 13822/BTC-TCT:

a) An export manufacturer means an enterprise that directly manufactures and/or processes goods for export (including those exported to export-processing zones) and the revenue from manufacturing of exports in the preceding year or current year makes up at least 51% of its total revenue from selling goods and services on its VAT statement;

b) Criteria for determination of projects of national importance shall comply with the Law on Investment 2014, the National Assembly’s Resolutions, the Government's Decrees, Resolutions and Decisions of the government on projects of national importance;

c) New and important investment projects in a province are investment projects for establishing new enterprises manufacturing goods subject to VAT on the list of projects within the competence to approve of the People’s Committee of the province and do not include: mineral and/or natural resources extraction projects; real estate investment projects; corporate building construction project; projects for construction of shopping malls, shopping mall complexes, apartment buildings, or offices for rent;

d) Tax shall be refunded to taxpayers granted diplomatic immunity;

dd) Tax shall be granted to foreigners buying tax-free goods upon their exit;

e) Tax paid by a foreign contractor shall be refunded when it is following procedures for dissolution or shutdown which has undergone inspection by a tax authority or a competent authority;

g) Tax shall be refunded to enterprises that are dissolved, bankrupt, or shut down and have undergone inspection by a tax authority or a competent authority;

h) Tax shall be refunded to projects funded by grant ODA and grant humanitarian aid serving programs and targets approved by competent authorities.

2. After tax is granted in the order of priority in paragraph 1 hereof and within the estimated budget for VAT refund in 2015, Department of Taxation shall refund tax to:

a) Enterprises that export through international checkpoints (except for natural resources, minerals, and exported goods derived from imported goods).

b) Department of Taxation shall review the cases above if General Department of Taxation has issued a notice of VAT refund supervision result which specifies that such taxpayer is not given priority according to Dispatch No. 13822/BTC-TCT and tax refund has been suspended up to the day on which this Dispatch is signed, then send a report to General Department of Taxation. The Department of Taxation shall concurrently refund tax to the taxpayers.

3. Instructions on declaration and refund of VAT incurred by branches and dependent accounting units of enterprises (hereinafter referred to as branches) in Clause 1 Article 11 of Circular No. 156/2013/TT-BTC and Point 9 of Dispatch No. 10492/BTC-TCT dated are revised as follows:

a) When the headquarters of a enterprise files an application for VAT refund, it must be enclosed with the statement of the headquarters' and branches' tax payable and tax debts in order to be offset against refundable VAT (form 01/NTDNBTNT enclosed herewith).

A branch that declares and pays VAT according to credit-invoice method and satisfy all conditions for VAT deduction and VAT refund according to regulations of law on VAT and tax administration must ensure that VAT on purchased goods/services serving its business operation is fully accounted for and matches the goods and services sold by such branch. The branch (hereinafter referred to as applicant) must be authorized in writing by the headquarters to follow tax refund procedures at the supervisory tax authority of the branch. The branch must enclose the application with the form No. 01/NTDNBTNT to offset tax payable and tax debts of the headquarters and its branches against refundable VAT.

b) Within 01 working days from the receipt of the application for tax refund, the supervisory tax authority of the applicant shall send a written request to supervisory tax authorities of the taxpayers that owe tax debts for certification of fulfillment of their tax liability (form No. 19/QTr-KK enclosed with Decision No. 879/QD-TCT dated May 15, 2015 of the Director of the General Department of Taxation). Within 02 working days, the supervisory tax authorities of the taxpayers that owe tax debts shall send a certification form No. 20/QTr-KK enclosed with Decision No. 879/QD-TCT dated May 15, 2015 of the Director of the General Department of Taxation). After the expiration of the said time limit, the supervisory tax authority of the applicant shall, in consideration of information about the taxpayers' fulfillment of tax liability on the Tax Management System, decide tax refund. The supervisory tax authorities of taxpayers that owe tax debts are responsible for the information they provided.

c) According to the certifications sent by supervisory tax authorities of taxpayers that owe tax debts and information on Tax Management System, the supervisory tax authority of the applicant shall decide VAT refund and offset it against outstanding tax payable and tax debt. According to the decision on tax refund, the tax authority shall issue a refund and offsetting order if the refundable tax and tax payable are of the same taxpayer ID number. Otherwise, the tax authority shall issue an order for refund of the refundable tax and another order for collection of tax payable and tax debts (form No. C1-01/NS enclosed with Circular No. 08/2013/TT-BTC dated January 10, 2013 of the Ministry of Finance, which is amended by Decision No. 759/QD-BTC dated April 16, 2013 of the Ministry of Finance).

4. With regard to taxpayers no longer eligible for tax refund before inspection specified in paragraph 3 of Dispatch No. 13822/BTC-TCT:

a) In any of the cases specified in paragraph 3 of Dispatch No. 13822/BTC-TCT the Department of Taxation shall subject the application for tax refund to inspection before refund.

b) The application is subject to inspection before refund if the applicant's violations are found during the inspection and the period of time between the time of discovery of the violations to the time of claiming refund does not exceed 02 years, and tax arrears to be collected is at least 10% of refunded VAT or at least 50 VND million.

c) The taxpayer is on the list of risky taxpayers included in the inspection plan of 2015 of tax authorities approved by the Ministry of Finance and General Department of Taxation.

5. General Department of Taxation shall assist and supervise Departments of Taxation refunding tax in accordance with paragraph 5 of Dispatch No. 13822/BTC-TCT (including every draft decision on tax refund and even the budget for tax refund has been depleted).

The period of supervising applications for tax refund by General Department of Taxation is not included in the time limit for Department of Taxation to process applications for tax refund.