Circular No. 93/1999/TT-BTC guides on value-added tax refunds

CIRCULAR

Guidelines for Value Added Tax Refunds

The Ministry of Finance issued Circular No. 89/1998/TT-BTC on June 27, 1998, and Circular No. 175/1998/TT-BTC on December 24, 1998, to guide the implementation of Decree No. 28/1998/NĐ-CP dated May 11, 1998, and Decree No. 102/1998/NĐ-CP dated December 21, 1998, which provide detailed regulations for implementing the Law on Value Added Tax; Decision No. 1632/1998/QĐ-BTC dated November 17, 1998, established rules for the establishment, management, and utilization of the VAT refund fund. To ensure timely and accurate VAT refunds, the Ministry of Finance provides specific guidelines on certain issues related to VAT refunds as follows:

I. ON THE ELIGIBILITY FOR VAT REFUNDS

1- Eligibility for VAT refunds:

Business entities subject to VAT under the tax deduction method are eligible for VAT refunds in the following cases:

a/ A business entity has a higher amount of deductible input VAT than output VAT for three consecutive months. The deductible input VAT includes the input VAT generated in the current month and the carryover from the previous month.

For example, Company B reports its VAT as follows:

(Unit: million VND)

Based on the above example, Company B qualifies for a VAT refund. The total refund for three months is 350 million VND.

b/ An export-oriented business entity with a large amount of input VAT due to exporting seasonal goods or large consignments can be considered for monthly or per consignment VAT refunds if the refund amount exceeds 300 million VND.

c/ Production and trading businesses subject to VAT that purchase fixed assets for new investments, expansion, or deepening investments shall have their input VAT refunded according to points a and b, Clause 2, Article 15 of Government Decree No. 28/1998/NĐ-CP.

d/ In addition to the aforementioned entities, businesses undergoing mergers, divisions, liquidations, or bankruptcies may be eligible for VAT refunds if they have overpaid VAT and request a refund, or if they have a decision from an authorized agency (these cases are not limited to businesses subject to VAT under the tax deduction method or direct calculation on VAT).

2- Responsibilities of entities eligible for VAT refunds:

a/ Prepare and submit a refund application to the tax authority. The refund application form is specified for each case in point I - part D - Circular No. 89/1998/TT-BTC dated June 27, 1998, issued by the Ministry of Finance.

b/ If the application is unclear or incomplete, the tax authority may request additional documentation or explanations, and the applicant must provide the requested supplementary information or clarifications.

c/ Businesses applying for a refund are responsible for the accuracy of the reported figures related to determining the refund amount. Any errors discovered during verification will result in back taxes being collected. Depending on the cause and severity of the violation, penalties or criminal liability may also be imposed under the law.

II. AUTHORITY AND RESPONSIBILITIES OF THE TAX AUTHORITIES AND STATE TREASURY IN HANDLING VAT REFUNDS

AND NATIONAL TREASURY IN RESOLVING VAT REFUNDS

1- Authority to handle VAT refunds:

a/ The Director of the Tax Department reviews and issues decisions on VAT refunds for entities managed directly by the Tax Department and District Tax Office.

b/ The Director General of the State Revenue Administration reviews and issues decisions on VAT refunds for special cases authorized by the Minister of Finance and state-owned enterprises established by Decision No. 90/TTg dated March 7, 1994, and Decision No. 91/TTg dated March 7, 1994, of the Prime Minister (referred to as the 90 and 91 State-Owned Enterprises) if centralized VAT refunds are processed at the headquarters of these enterprises.

2- Responsibilities of the tax authorities in handling VAT refunds:

a/ Accepting refund applications from taxpayers. The receiving department records the date of receipt and promptly forwards the application to the verification and processing department.

b/ Verifying the application and determining the refund amount:

- The verification department is responsible for checking: the summary table of output VAT, deductible input VAT generated, export contracts, export processing contracts with foreign countries, customs declarations for exported goods with confirmation of actual exported quantities by the customs office...

- Verify the proposed refund amount; compare the purchase and sales invoices, output VAT, deductible input VAT... with the business operations and tax payments of the previous month to determine the actual refund amount for the enterprise.

If the application is missing information, the unit should be asked to supplement it; if incorrect or unclear declarations are found, discussions with the unit may be necessary to clarify. In specific cases, the unit may be required to provide additional explanations or supporting documents (without conducting a full audit).

The tax authority must review the application and process the refund within 15 days from the date of receipt of the refund application. If further verification, supplementation of documents... is required, the maximum time allowed is 30 days. If the refund conditions are not met, the authority must inform the unit within 7 days from the date of receipt of the application.

c/ Issuing the refund decision: After verification, if all procedures and conditions comply with point I - part D - Circular No. 89/1998/TT-BTC dated June 27, 1998, issued by the Ministry of Finance, the refund amount is determined and submitted to the Director of the Tax Department for issuance of the refund decision for the taxpayer in accordance with the law.

After the refund, if there are doubts or a need to conduct an inspection or audit at the business premises to verify the refund amount, the tax authority may decide to inspect or audit.

3- Responsibilities of the State Treasury:

Upon receipt of the refund decision and the payment instruction for VAT refunds sent by the tax authority, the provincial or municipal State Treasury must process the VAT refund payment to the recipients within a maximum of 3 days from the date of receipt of the payment voucher. Simultaneously, the provincial or municipal State Treasury is responsible for immediately processing the settlement with the VAT refund fund at the Central State Treasury.

III. IMPLEMENTATION

To ensure the VAT refund in accordance with the Law, it is requested that the People's Committees of provinces and cities actively direct the Tax Department to promptly and accurately refund VAT to taxpayers who are eligible for such refunds. At the same time, it is required that relevant departments cooperate with the Tax Department to strengthen inspections and guidance to taxpayers on strictly adhering to accounting, statistical records, invoices, and vouchers; declaring the amount of tax due as well as the amount of tax requested for refund accurately and completely.

This Circular shall take effect fifteen days from the date of signature. Previous regulations regarding VAT refunds that conflict with the provisions of this Circular are hereby abolished. During implementation, if there are any difficulties related to the processing of VAT refunds, it is requested that taxpayers, relevant departments, and localities promptly reflect these issues to the Ministry of Finance for study and resolution.