COMMENTS ON REVIEW OF TAX ADMINISTRATIVE PROCEDURES

1. COMMENTS ON REVIEW OF TAX ADMINISTRATIVE PROCEDURES SUMMARY OF RESULTS OF REVIEW OF TAX APs The tax working group

2. CONTENTS • Part 1 : 10 APs of tax refund at department level and 8 APs of tax refund at branch level • Part 2 : Procedure of registration for self-printed invoices • Part 3 : Procedure of first-time tax registration by subordinate organizations

3. REVIEWED APS 1. VAT refund in the case of export with cash payment (refund first check later) 2. VAT refund in the case of export with cash payment (check first refund later) 3. VAT refund in the case of tax input not totally deducted in 3 consecutive months, or in the case of investment in progress with no VAT input (in the case of check first, refund later) 4. VAT refund in the case of tax input not totally deducted in 3 consecutive months, or in the case of investment in progress with no VAT output (in the case of check first, refund later) 5. VAT refund in the case of exports with in kind payment (in the case of refund first, check later )

4. CÁC THỦ TỤC RÀ SOÁT 6. VAT refund in the case of exports with in kind payment (in the case of check first, refund later ) 7. VAT refund in the case of on-site exports ((in the case of refund first, check later ) 8. VAT refund in the case of on-site exports ((in the case of check first, refund later) 9. VAT refund in the case of processed goods in transit (in the case of refund first, check later) 10. VAT refund in the case of processed goods in transit (in the case of check first, refund later) And corresponding APs at branch level 12. Registration of self-printed invoice forms 13. First-time tax registration by tax payers that are subsidiaries to business entities, excluding co-operatives, complexes (except in the case of through inter-departmental one-stop shop)

5. I. General comments on the 18 VAT refund APs 1. The procedures are clear and concise 2. Having legal basis BUT: 1. Duplications found in all the 10 APs due to unreasonable basis for categorization • 9 out of 11 contents of APs of VAT refund for export goods are duplicated • 10 out 11 contents of Aps of VAT refund in the case of input VAT having not totally deducted for 3 consecutive months are duplicated • APs in the case of check first and of check later are different only in the time of settlement (1/11) • Use the same form: Form 05/ĐNHT and 01-1/HTBT 2. Erroneous replication due to carelessness

6. 3. No content on the objective of the AP 4. Inconsistencies in time of settlement (working days – weekdays) and with Law on Tax Management 5. The condition for refund used as a basis and name of the APs

7. II. Review by Form 3 • Objective of tax refund APs No objective included for all the APs. The reviewing group, therefore, sets the objectives of the procedures based on relevant regulating LNDs and makes assessment accordingly. 2. Steps and mode of implementation are not stated in full and clearly: - Insufficient requirements: requirement on receipt of dossier via post and electronically is missing - Insufficient steps: Tax refund considered complete only when the enterprise receives the refunded money but in all the APs, the last step included is notification of improvement of the dossier.

8. Review by Form 3 3. The provision on tax refund dossier specifies clearly the number of the dossier but unreasonably the element of the dossier and forms - As stated in item iii : the list of the dossier elements signed and sealed by the applicant leads to different interpretations and presentations as to whether to enclose copies? • Form 01/HTBT no longer in effect • Form 01-1/HTBT duplicates in content with Form 05/ĐNHT 4. Tax refund APs are consistent and in line with other APs BUT: duplications in content with APs at department and branch level and between tax refund APs

9. Review by Form 3 5. The AP defines clearly agency responsible for settling the AP: tax department and branch implement; department makes decision BUT: that tax branches not authorized to sign refund decisions contributes to delay and lack of joint responsibility in handling refund dossiers 6. The AP defines clearly time of settlement (15 and 60) but contradict with Tax Management Law, where time of settlement can be shortened BUT: - Decisions on refund do not specify time-limit for implementation - The provision on notifying improvement of dossiers to be made prolongs the time of refund for businesses

10. Review by Form 3 7. Other comments: - Tax refund has not achieved the objective: fast processing and encouraging businesses to export • Notification of improvement of the dossier is among the causes of delays/lengthened time of settlement of the AP - Necessary to implement online refund - Responsibility is still shifted around tax agencies: from branch to department, from department to general department - There still exist misuse of the law or inconsistencies between special cases that are similar • There are differences between the refund dossier for Vietnamese enterprises and joint ventures • There are other documents than those regulated that tax officers require businesses to submit

11. III. RECOMMENDATION • General recommendation • Combine 8 tax refund APs into 1 or 2 APs for refund first check later and check first refund later Reasons:- Duplications as mentioned - Convenient for businesses’ search and study 2. Combine APs at department levels with APs at branch level Reasons: - The dossier receiving and settling agencies are regulated by the APs - The business should submit the dossier to the governing tax agency 3. Decentralize the signing of refund decisions to tax branches Reasons: - Tax branches are in charge of implementing and managing tax collection activities - Attach responsibility to tax officers when handling dossiers

12. RECOMMENDATION 4. Shorten time of settlement: • 7 days for refund first check later • 3o days for check first refund later Reasons: - Tax agency can notify about required improvement of the dossier within 3 days, i.e. assessment of the dossier can be done in 3 days - Refund is intended to return the business’ capital lodged into the state budget, therefore, shortened time will help businesses to save capital cost. - Application of ICT into tax management and customs will shorten time for checking dossiers, especially in export goods

13. RECOMMENDATION B. Revise the APs: - Add the content: OBJECTIVE OF THE AP • Re-write the steps of implementation: covering the stage when the State Treasury transfers money to the business - Regulate more details on notification of improvement of the dossier (how to identify a dossier unsatisfactory, the number of notifications, etc.) • Tax refund dossier: it should be made clear that the list of dossier elements signed and sealed do not require enclosed copy.

14. RECOMMENDATION • Add contents about the condition of check first refund later • Clearly state that the result of AP settlement is the refund decision • Regulate time-limit for tax agencies to issue a payment order to refund tax to businesses: 2 days from the date of signing of the refund decision • Provide guidelines for implementing the procedures

15. IV. OTHER RECOMMENDATIONS • Decentralize the signing of decisions of tax refund to tax branches • Publish tax refund dossier handling process • Apply sanctions to deliberate delays in handling tax refund dossiers • Regulate increased accountability of businesses for tax dossiers • Prompt update of information on Ministry of Finance’s website - Deliver regular training to update and enhance tax officers’ technical capacity

16. Form 3a Form 05/ĐNHT under Circular 128/2008/TT-BTC • Necessary • Contents of the form is easy to understand • State agency certification not required • The form is presented in a convenient format • Reasonable and easy to understand language • The form is easy to access BUT the procedure mention Form 01/HTBT, which is confusing and apt to cause mispresentations by businesses • Implement online declaration Conclusion: Should continue and arrange contents so as to enable ticking by tax payers to complete the form

17. Part 2 : PROCEDURE OF REGISTRATION OF SELF-PRINTED INVOICES 1. The provision on issuing serial no./code for self-printed invoices limits businesses’ autonomy 2. The provision on the quantity of invoices increases cost 3. The provision on checking actual existence of businesses is formalistic, creating obstacles and time cost Recommendation: • Give businesses autonomy in terms of invoice printing and serial no. • Eliminate unnecessary documents in the dossier: - Map of the business /production premises or office - House rental contract cerfitifed by people’s committee at commune, ward or township level - Copy of ID - Original and copy of certificate of tax registration. 3. Annul the provision on checking the actual business premises of the enterprise 4. Add a provision allowing enterprises to use electronic invoices.

18. Part 3. Thủ tục Đăng ký thuế lần đầu đối với người nộp thuế là đơn vị trực thuộc của tổ chức kinh doanh trừ Hợp tác xã, tổ hợp (trừ trường hợp qua một cửa liên thông) • ABOLISH THE PROCEDURE - When the governing business organization registered for a tax code, it is granted tax codes (13-digit) for subordinate units. • This provision increase unnecessary activities; subordinate units already have 13-digit tax codes • Tax agencies are responsible to check subordinate units’ tax codes and notify the system

19. RELATED LEGAL DOCUMENT TO BE REVISED 1. Tax Management Law - Clause 2 Article 60: Time-limit for refund first check later - Clause 3 Article 60: Time-limit for check first refund later 2. Circular 60/2007/TT-BTC - Clause 2.1 section II part G: Time-limit for refund first check later - Clause 2.2 section II part G : Time-limit for check first refund later 3. Circular 85/2007/TT-BTC Point 2.1, Section I, Part II 4. Circular 120/2002/TT-BTC Point 2.1c, Section V, Part B: Unnecessary paperwork and activities in the dossier and dossier review process for registration for self-printed invoices should be abolished.