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Nation's airports to offer VAT refunds to foreign travellers

Update: February, 01/2012 - 09:44

HCM CITY — Foreign tourists will receive value added tax (VAT) refunds on goods they purchase in Viet Nam when leaving the country via Ha Noi's Noi Bai and HCM City's Tan Son Nhat airports.

Under a decision issued by Prime Minister Nguyen Tan Dung, the pilot VAT refund scheme will be implemented from July 2012 to June 30,2014.

Under the pilot scheme, any foreigner leaving Viet Nam with an invoice worth at least VND2 million (US$95.2) from a shop on a day can claim VAT refunds at the two major terminals.

The net VAT refund will be the total VAT payment minus the VAT refund fee, which will be paid in the local currency, the dong. The fee will not exceed 15 per cent of the total VAT payment.

However, goods that overseas travelers claim refunds for must meet certain conditions. They should be new items, subject to VAT and eligible to be taken on flights under aviation safety rules. They are also subject to export regulations regarding banned or restricted products.

The receipt (also used as the VAT refund declaration form) must be issued within 30 days of the date the visitor leaves the country.

Commercial banks selected to handle the tax repayments will be allowed to charge a service fee of up to 15 per cent of the refund value. The refund will be paid in dong and can be converted to other currencies.

Travel firms have proposed several times that the Government refund VAT for overseas visitors so as to motivate them to spend more.

In July 2011, the Government asked the Ministry of Finance and related agencies to launch a pilot plan for VAT refunds. The plan was introduced to the public last September.

"The VAT refund aims to promote tourism, increase foreign currency in the country and encourage on-the-spot exports," said head of the Finance Ministry's Import-Export Tax Department Lo Thi Nhu.

The ministry had disseminated VAT collection and refund criteria to eligible businesses in Ha Noi, HCM City and traditional trade villages, Nhu said.

To attract foreign visitors, other ASEAN countries have, for several years now, been offering VAT refunds for foreigners. Singapore gives a 7 per cent VAT refund for receipts of over SGD100 ($80.5) but the net refund is about 5 per cent.

Thailand also applies a 7 per cent VAT refund on bills of over 5,000 baht ($160), excluding administrative charges.

A recent survey done by the Viet Nam National Administration of Tourism shows that the average stay of a foreign tourist in Viet Nam is 10.5 days with an average expense of $1,024, excluding air fares.

The country welcomed more than 6 million international tourists last year, up19.1 per cent year-on-year. — VNS

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