National Assembly Deputies have many times conveyed complaints to thr taxation agency, urging the NA to clearly define tax authorities’ responsibilities, especially for VAT refunds.

Businesses are frustrated because collecting tax is easy, but refunding is hard. The responsibility must be fair under the law. Businesses that delay tax payment are fined, and in turn, tax authorities that delay refunds should face the same accountability.

VCCI has recently submitted a petition to the Prime Minister, proposing solutions to address VAT policy obstacles. More than three months after the 2024 Law on VAT took effect, VCCI received numerous complaints from industry associations representing seafood, coffee, pepper, livestock, food processing, and woodwork enterprises. These industries are facing difficulties that severely affect cash flow, competitiveness, and export market share of their agricultural goods.

Under the 2024 VAT Law, products “not yet processed into another product or only preliminarily processed” are subject to a 5 percent tax rate.

In practice, many agricultural products such as coffee, pepper, cashew nuts, shrimp, fish, and raw wood are only preliminarily processed through simple steps like shelling, drying, peeling, or roasting. These processes do not generate substantial added value.

According to VCCI, applying a 5 percent VAT rate to such products is inconsistent with the fundamental principle of VAT, which taxes only the value added during production and business activities.

Particularly, under the “collect first – refund later” mechanism, enterprises have to advance large amounts of capital to pay taxes upfront, even though their profit margins are only 1–3 percent.

For example, the coffee industry must prepay nearly VND10,000 billion in VAT annually, while the pepper sector must advance about $85 million. This increases export costs and undermines Vietnam’s competitiveness against countries such as Brazil, Indonesia, and India, where raw agricultural exports are exempt or taxed at zero percent.

VCCI noted that the VAT refund process remains complicated and legally risky, with many businesses reporting refund delays lasting several months, or outright rejections for reasons beyond their control.

A new requirement under the 2024 VAT Law stipulates that refunds are only granted if the seller has declared and paid the tax. VCCI argued that this is unreasonable, as it passes the seller’s responsibility to the buyer, who has already fulfilled all tax obligations.

In addition, exporters selling through e-commerce platforms such as Amazon and Alibaba face refund difficulties due to the lack of traditional contracts and paperwork. The inability to use digital data, e-invoices, or substitute documentation has prevented many legitimate exporters from obtaining their legal refunds.

Automatic VAT refunds

VCCI proposed revising the regulations related to VAT for unprocessed or only preliminarily processed agricultural, forestry, and fishery products.

It also suggested restoring (or temporarily restoring) the “no declaration, no tax” rule applied to preliminarily processed farm produce which was applied per Decree 209/2013.

VCCI further recommended that the Government direct the Ministry of Finance to establish an automatic VAT refund mechanism for valid, fraud-free applications, similar to the system implemented in countries like India.

At the same time, an interconnected electronic database between tax authorities, customs, and enterprises is needed to support rapid and accurate verification and reconciliation.

VCCI also proposed amending refund conditions by removing the requirement that refunds are only granted when the supplier has declared and paid VAT. This condition is considered unreasonable, as it causes buyers to be denied refunds due to third-party errors despite having fulfilled payment, documentation, and reporting obligations.

According to VCCI, ensuring seller tax compliance should be the responsibility of the tax authority, not the buyer.

The organization urged the Government and the Ministry of Finance to allow the use of electronic documents and digital transaction data as valid evidence for export VAT refunds.

It believes that current administrative penalties, ranging from VND5 million to VND8 million, for minor technical errors such as late declarations or incorrect contract codes are too harsh and create unnecessary pressure. 

It proposed a leniency policy: waiving penalties for first-time or minor violations under VND50,000 to encourage voluntary compliance rather than fostering fear among taxpayers.

Nguyen Le