ANSWERING THE SUGGESTIONS OF KOREAN ENTERPRISES AT THE TAX AND CUSTOMS POLICY DIALOGUE - OTIS LAWYERS

At the policy dialogue conference between the Ministry of Finance and Korean enterprises on Tax and Customs administrative procedures held last week, the Korean business community highly appreciates the Ministry of Finance for organizing the dialogue conference to resolve difficulties for businesses. The suggestions of the Korean enterprises at the conference were informed and clarified by representatives from the General Department of Taxation and the General Department of Customs.

Consultation, amendment of VAT refund content for investment expansion projects

According to Mr. Choi Youngsam, the Korean Ambassador to Vietnam, thanks to the attention and support of the Vietnamese Tax and Customs authorities over the past years, Korean enterprises have built a business foundation in many fields and locations in Vietnam. At the same time, he affirmed that creating a stable economic ecosystem, including many dynamic economic entities, is the most important key to ensuring a broad tax base, or in other words, ensuring stable tax revenue. In recent years, due to rapid changes in the tax environment, tax laws and tax administrative procedures have been continuously changing, so organizing dialogue conferences is a very important opportunity to work together to address difficulties for businesses.

According to the Korean Ambassador, besides the issue of double taxation on supplemental income from international transportation activities, some enterprises also reflected difficulties related to delayed VAT refunds in some localities, inclusion of subcontractor contract money in the taxable income list, or cancellation of previously committed tax incentives.

At the conference, some enterprises raised questions about taxes for foreign suppliers and tax declarations for contractors. Addressing this issue, Deputy General Director of the General Department of Taxation, Mai Sơn, stated that for contractor taxes, the General Department of Taxation has established an electronic information portal for foreign suppliers to register, declare, and pay taxes for services in Vietnam. The General Department of Taxation encourages foreign suppliers to officially register, declare, and pay taxes. When foreign suppliers register their tax identification number, there is no need to declare contractor taxes.

Also at the conference, Korean enterprises also mentioned the issue of VAT refunds for investment expansion to promote and encourage enterprises to expand investment in the future. According to the enterprises, currently, there are only regulations on VAT refunds for new investment projects, while for expansion investments, some local Tax agencies have stated that there are no implementation guidelines. Therefore, Korean enterprises proposed amending and supplementing legal regulations on VAT refunds for expansion investment projects to be suitable with the development of VAT laws in the future.

Regarding the VAT refund policy for expansion investment projects, according to Mr. Mai Sơn, the Customs Management and Supervision Department (Ministry of Finance) is currently advising and amending this content towards allowing VAT refunds in these cases. For specific cases, for export enterprises investing in purchasing machinery and equipment to expand production and business, they may be invoiced based on the determined ratio for cases of purchasing for expanding export activities. Based on specific cases, Tax authorities will determine this content.

Continuing to improve mechanisms and policies

At the conference, questions related to tax and customs policies were raised. The Ivory Garment Company representative mentioned the case of the company's factory in Trieu Son district, Thanh Hoa province, which suffered a major fire in 2021, causing the company to face difficulties. According to the regulations of Decree 134/2016/ND-CP applied at the time of the fire, the determination of the cause and losses of the fire must be completed and reported to the relevant Customs authority within 30 days from the occurrence of the fire. In case the reporting deadline has passed, the company must pay the penalty as prescribed. However, determining losses and reporting within the 30-day period is actually extremely difficult, so the company is currently being considered for penalties. Therefore, the company proposed that the Ministry of Finance and the General Department of Customs consider the difficulties caused by the fire and positively consider exempting the mentioned penalty amount for the company, as it did for a similar case before.

Discussing Decree 134/2016/ND-CP regulations regarding the 30-day inspection period, Mr. Hoang Viet Cuong, Deputy Director General of Customs Supervision and Management Department, General Department of Customs, explained that goods under customs supervision must undergo inspection and certification of damage due to fire. Companies experiencing fires at different times should apply the legal provisions at that time. To resolve difficulties for companies, it is suggested that companies provide complete documentation for the management agency to consider the nature and extent of the damage, whether it is similar to the cases mentioned or not. The Customs leadership also suggested that besides the Ivory Garment Company, if there are any other companies in similar situations, they should report and propose to the General Department of Customs to report to the Ministry of Finance, proposing that the Government consider specific factors as well as a comprehensive review to create conditions for companies in similar situations.

Regarding questions about difficulties in on-site customs clearance, at the conference, Mr. Anh Tuan, Director of the Customs Supervision and Management Department, General Department of Customs, also explained and clarified the amendment of Article 35 of Decree 08/2015/ND-CP detailing and implementing the Customs Law on customs procedures, inspection, supervision, and customs control. Mr. Anh Tuan said that the General Department of Customs has collected opinions from ministries, sectors, localities, and business associations on amending Article 35 of Decree 08/2015/ND-CP and has received contributions from ministries, sectors, and business associations. The roadmap will be submitted to the Government for issuance in 2024, effective from early 2025, in line with the implementation of customs projects, smart customs. Section 1 of Article 35 has 3 points, it is expected that point c will be removed, leaving points a and b. Points a and b will be transferred to guidance in Circular 38/2015/TT-BTC (amended and supplemented by Circular 39/2018/TT-BTC). However, during the amendment process, Mr. Anh Tuan stated that opinions from businesses, including Korean enterprises, have been received, requesting the Ministry of Finance and the General Department of Customs to carefully evaluate the legal basis, impact on business operations, state tax revenue, as well as ensuring trade facilitation and other management activities in the context of on-site customs accounting for 18% of the export turnover, playing a significant role in the formation of the supply chain in Vietnam, helping businesses invest, do business, and complete tax refund procedures...

According to the representative of the Consulate General of Korea in Ho Chi Minh City, the dialogue conference is a very important event for the Korean business community operating in production and business in Vietnam. At the same time, they expressed their hope that the Government of Vietnam, the Ministry of Finance will continue to improve mechanisms, policies, and promote comprehensive administrative procedure reforms in the tax and customs fields towards creating an equal, transparent, and convenient business environment for domestic and foreign business communities operating in Vietnam.

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