|Tax refunds are part of businesses' capital
In Vietnam, a tax refund involves only value-added tax (VAT); and this tax has two aspects: the tax payable is the added-value portion and the tax to be refunded is part of businesses' capital. In reality, VAT payment is easy but getting the VAT refund is difficult. To solve this problem, a correct understanding of two different aspects of VAT is necessary.
Under current regulations, businesses get tax refunds in case where the output VAT is lower than the input VAT. This means that the VAT collected upon a sale is not sufficient to offset the input VAT businesses have to pay upon buying goods. In other words, while the added value in sales is not sufficient, businesses still have to use their own funds to pay VAT when buying goods.
So, the VAT to be refunded is essentially part of the capital of businesses. As long as this VAT amount is not refunded, it means part of their business capital is usurped. Capital is a material means of businesses, and this usurpation involves taking away the means that businesses need to create added value, which also feeds tax revenue. This is a paradox, as it runs counter to the policy of creating favorable conditions for business operations. Moreover, it also means that the State can easily borrow funds from businesses without any procedure, while businesses have to make an application to ask for tax refunds, and the decision for a refund is in the hand of tax authorities.
It's high time the VAT collection was seen as a way to collect part of the revenue of businesses, and tax refund as a way to repay debts to businesses. If tax payment is seen as the obligation of businesses to the State, then the tax refund should be considered the responsibility of the State to businesses. Businesses that pay tax late are fined; tax authorities that refund tax to businesses late should be responsible for compensation to businesses.
It is only with this fair thinking that one can improve the situation, putting an end to the delay in VAT refunds that negatively affect the operation of businesses.
- Le Van Tu, HCM City