VAT refund process needs simplifying: experts

December 08, 2017 - 09:00

Experts have urged simplifying the procedures to receive refunds on value-added tax (VAT) for foreign tourists.

Foreign tourists claim VAT refunds at Tân Sơn Nhất International Airport in HCM City. —VNA/VNS Photo Hoàng Hải
Viet Nam News

HCM CITY — Experts have urged simplifying the procedures to receive refunds on value-added tax (VAT) for foreign tourists.

Speaking at a seminar on VAT refunds on Wednesday in HCM City, Dr. Phạm Trung Lương, vice chairman of the Việt Nam Tourism Education Association, said that VAT refunds encourage tourism and boost visitors’ spending, but the procedures to receive refunds in Việt Nam was unclear and inconsistent.

As a result, many tourists at border gates and airports do not receive VAT refunds, he added.

Lawyer Nguyễn Văn Hậu, chairman of the Việt Nam Law Arbitration Centre, said foreign tourists and overseas Vietnamese currently receive VAT refunds on purchases made in Việt Nam under a circular that took effect in 2014.

Visitors leaving Việt Nam can claim 85 per cent of the VAT charged on goods bought in the country. 

Goods eligible for a VAT refund must not be among those prohibited for export as regulated by the Ministry of Industry and Trade and should not be goods subject to special management.

To qualify for a VAT refund, a tax refund declaration form must be issued within 30 days from the departure date of the traveller. A valid invoice for goods costing at least VNĐ2 million ($90) must be presented.

VAT refunds will be paid in đồng or a foreign currency in line with current bank exchange rates, according to Hậu.

Before security and customs checks on flights, foreigners at airports must submit several documents for inspection at the customs counter to claim a refund. These include a bill-cum-VAT refund declaration form and a receipt, along with the goods in question. 

The foreigner must also show a passport or ID papers.

If the purchases are not taken on board as hand luggage, the foreign traveller must present the goods and a tax invoice at a VAT refund desk or to a customs official prior to check-in.

Phan Đình Huê, director of Vòng Tròn Việt Travel Company, said the purpose of VAT tax refunds was to encourage tourism and the purchase of goods made in Việt Nam.

“It should never be considered a favour we do for tourists,” he said. “Our survey shows that most foreign visitors are primarily concerned about fake or counterfeit goods, instead of the price. Some European customers have complained about the quality of lacquer items purchased in Việt Nam.”

Việt Nam is also not considered a major shopping destination, so visitors are not particularly interested in VAT refunds, he said.

Lawyer Bùi Quang Tín pointed out that counterfeit goods and imported Chinese goods were prevalent in the market.  

For example, the recent Khaisilk scandal, a big company that was found importing Chinese goods under its brand name, has discredited many Vietnamese brands, he said.

“This makes it more difficult for international visitors to get VAT refunds as the quality of the purchased goods is not in line with the content declared on the invoice,” he said.

Ineffective scheme

Only 649 stores of 80 enterprises had taken part in the VAT refund programme as of the end of last month, according to the HCM City Department of Tourism.

Economist Đinh Thế Hiển said the current VAT refund for tourists was still not prevalent in Việt Nam, with only nine tax border gates, mostly in HCM City.

VAT refunds are more common and more easily secured in Singapore, Hong Kong, South Korea and Japan, among other countries, he said.

He said that many foreigners were unaware of Việt Nam’s VAT refund policy.

Shaun Ang, a Singaporean photographer who has travelled between Singapore and Việt Nam for 10 years, said he did not know about the VAT refund scheme.

“The VAT refund can promote tourism, so I think the scheme should be further promoted so that foreigners know about it,” he said.

“The Vietnamese Government should make the procedures easy and convenient for foreigners,” he told Việt Nam News. “It’s really easy to get a VAT refund at Singapore’s Changi International Airport. Visitors can also get VAT refund easily in some big stores in town.”

Ong Din Han, of Malaysia told Việt Nam News: “I travel between Việt Nam and Kuala Lumpur every month for business, but I was unaware of the policy.”

According to the customs division at HCM City’s Tân Sơn Nhất International Airport, the amount of VAT refunds so far this year was VNĐ35.5 billion ($1.56 million) compared to VNĐ44 billion ($1.94 million) last year.

Lê Tuấn Bình, deputy director of the customs department of Tân Sơn Nhất airport, said around 40,000 people arrive and depart from the airport every day, with half of that figure representing departures.

However, the total number of VAT refunds being processed daily at Tân Sơn Nhất airport are worth a total of only VNĐ100 million ($4,400), which shows the low demand for such refunds.

Most VAT refund items include sunglasses, cosmetics, handbags, clothes, footwear, cellphones and watches.

The seminar on VAT refunds was organised by Thanh Niên Newspaper Joint-Stock Company. — VNS