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Vietnam now has the great opportunity of earning billions of
dollars a year more from exports thanks to the value added tax (VAT) immunity
policy applied to the foreigners and overseas Vietnamese passing through the
country's two biggest airports.
Deputy General Director of the General Department of Customs Hoang Viet Cuong
has said that taxation bodies, customs agencies, treasuries, the two chosen
commercial banks and enterprises have been making hectic preparations for the
implementation of the pilot plan on refunding VAT to foreigners.
From July 1, 2012, the people who leave the country will be reimbursed 85
percent of the VAT they have paid. The remaining 15 percent of the refund value
will be used as service fees to pay banks that handle tax repayments.
Cuong said that the tax refund to foreigners upon their exit has been
implemented in the world for the last tens of years. However, Vietnam can only
carry out the tax refund at this moment.
In the immediate two years, commencing from July 1, 2012, the tax refund would
be applied only to foreigners and Vietnamese people, who settle down in foreign
countries and show entry-exit documents granted by foreign countries at the two
international airports of Noi Bai in Hanoi and Tan Son Nhat airports in HCM
City.
Also according to Cuong, if the pilot program runs smoothly, Vietnam would not
have to wait two years as previously planned to begin applying the scheme in a
large scale. By that time, the tax refund scale would be enlarged, and the tax
refund would be carried out at many international border gates - the air, road
and sea border gates.
However, experts have warned that it would be very difficult to implement the
tax refund because of the large number of people subject to the tax refund, with
the number of foreign tourists to Vietnam increasing rapidly by 15-20 percent
per annum.
Besides, the tax refund would need the close cooperation among relevant branches
including customs agencies, treasuries, taxation bodies, banks and enterprises.
In the immediate time, customs agencies would take the initiative in cooperating
with relevant branches to build up the customs examination and reimbursement
procedures and set up necessary regulations, to ensure that the formalities
would not cause inconvenience to foreigners.
Nevertheless, Cuong admitted that there always exists a big gap between the will
and the implementation. Even the countries with developed economies which have
been carrying out the tax refund scheme for the last tens of years such as South
Korea, the US or Germany, troubles still occur.
The General Department of Customs has estimated that with six million foreigners
traveling to Vietnam (in 2011), and each of them buys the goods worth 200-300
dollars, Vietnam’s export turnover would increase by 1.5 billion dollars at
least.
“The number of foreign tourists to Vietnam increases by 15-20 percent year on
year. Therefore, the turnover of the exports through hand luggage would be
relatively big,” said Lo Thi Nhu from the customs department.
Especially, the new policy would help develop tourism and encourage the
development of many relating economic fields.
The enterprises to be chosen to sell free-duty goods to foreigners would be able
to enjoy big interests. Especially, they can seek bigger profits thanks to
boosting sales to foreign tourists.
In order to be chosen to sell duty-free goods, enterprises just need to have
head quarters or branches, shops or agents located in Hanoi, HCM City or the
handicrafts villages which are the key points in the tour routes.
Despite a lot of benefits, Vu Van Truong, Deputy General Director of the General
Department of Taxation, said not many enterprises want to join the pilot
program.
“As businesses anticipate the complicated procedure and technique in selling
duty free goods, they would listen to the news before making decision,” Truong
said.
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