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VAT refund scheme ‘should be expanded'

Update: July, 09/2012 - 09:15
A pilot value-added tax (VAT) refund scheme for foreigners and overseas Vietnamese passing through the country's two biggest airports of Noi Bai in Ha Noi and Tan Son Nhat in HCM City started on July 1. However, the number of enterprises to have joined the pilot scheme by June 29 was just 7 with 68 shops. Viet Nam News reporters asked a customs official, an enterprise supporter and an entrepreneur about the issue.

Hoang Viet Cuong, deputy director of the Viet Nam General Department of Customs


Hoang Viet Cuong
The VAT refund scheme for foreigners would benefit enterprises that joined the project a lot. Enterprises that want to take part in the scheme must meet certain requirements, such as being a legally registered enterprise in Viet Nam, conducting business involving products in the VAT refund category, and having shops in Ha Noi and HCM City or handicraft villages in tourism sites. The enterprises must also have accounting, invoicing and VAT paying systems in accordance with the law.

Joining the VAT refund scheme would help enterprises to increase income by selling more goods to tourists and promoting their businesses.

However, this is a complicated process since it involves many sectors. The customs department also has to work with six others sectors including tax, banking and treasury departments. As we all know, work involving different sectors is normally complicated. What we need is to clarify the function of each sector. In the coming time, we will work on this seriously. For example, how would the inspection of the customs department work, and how would the VAT refund procedures benefit enterprises.

We may still be in a pilot scheme stage, but we are determined to implement it.

Pham Gia Tuc, Vice President of the Viet Nam Chamber of Commerce and Industry (VCCI)


Pham Gia Tuc
Refunding VAT for foreigners and overseas Vietnamese is a prudent policy decision by Viet Nam's Government which is in line with international practice, especially as Viet Nam becomes more and more integrated into the global economy.

Many countries have already applied similar schemes. The move is expected to help attract more visitors to Viet Nam who will buy goods in the country. As a result, Vietnamese enterprises can sell more products, paving the way to introduce their products and promote their images. Last but not least, it can help to boost co-operative commerce and trade relationships between Viet Nam and other countries.

Many measures will need to be taken to put the scheme into practice in Viet Nam. I think that one of the most important activities is communication. So far, few beneficiaries including foreigners, overseas Vietnamese and domestic enterprises, and retailers are aware of the initiative.

Many retailers are yet to understand the advantages and benefits the initiative can bring to them, causing few of them take part in the scheme. Another reason for the limited number of participants is that to be eligible for the scheme, retailers are required to satisfy criteria in terms of administrative procedures, registration, goods and invoices.

During the preparation process for the pilot scheme, the VCCI co-operated with relevant agencies including the General Department of Taxation and the Customs Department to introduce the scheme and the policy to more than 200 enterprises in Ha Noi and HCM City. The VCCI will continue to work with domestic enterprises and help them to take advantage of the VAT refund policy.

Viet Nam can also learn from other countries that have already implemented the scheme. I think the pilot period should be shortened to six months or one year, so that the expansion of the refund can be realised more quickly.

In addition, the location of refund booths should be diversified because a large number of visitors arrive in Viet Nam via Noi Bai Airport in Ha Noi or Tan Son Nhat Airport in HCM City, but also by major railway stations or ports in Hai Phong, Da Nang and Nha Trang. The booths must be easy to find and the refund procedure must be simple and clear. If not, people will not bother applying for their refunds because of the short time they spend at the airports before their flights.

Tran Dang Dinh, Director of Ha Thanh Trade and Services Company in Ha Noi

My company imports and exports handicraft products for tourists. I have heard about the pilot VAT refund scheme and I see it as a good way to help enterprises to promote their products.

However, to my understanding, the administrative procedures to join the scheme are quite complicated. We have to register for participation and wait to be recognised by the department of taxation. I have not received many instructions on how to join the scheme. The authorities should have more programmes to promote the scheme and invite more enterprises to join it in order to increase competitiveness. It would make the policy more transparent. By doing that, the scheme would also create a healthy business environment and the quality of Vietnamese products would improve.

I think that two years to pilot the scheme is too long, and it is only being piloted in Ha Noi and HCM City. Enterprises can only take part if they operate in those designated areas, and it is unfair for those that do not. The scheme should also be applied at other airports and border gates. — VNS

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