VietNamNet Bridge – Coffee and sugar producers have proposed to remove the VAT to help reduce troubles with enterprises and clear the tax frauds.

The Vietnam Coffee and Cocoa Association (Vicofa) and the Vietnam Sugar and Sugar Cane Association (VSSA) have sent official dispatches to the General Department of Taxation, requesting to cut the VAT rate from five to zero percent.

A lot of exporters have shouted for help, complaining they don’t have working capital and cannot export products because of the delay in the VAT refund. The problem has become so serious that a rumor had spread out in the world that the Vietnamese coffee industry is nearly collapsing.

Vicofa’s Deputy Chair Do Ha Nam said on local newspapers that he has to receive the representatives from banks and foreign institutions who come after hearing about the collapse of the coffee industry.

Vicofa believes that most of the domestic coffee output has been exported; therefore, it is not necessary to impose VAT.

“In principle, enterprises will get tax refunds after the export. Why doesn’t the taxation body think of removing the tax, then? If so, enterprises would not have to spend time on tax payment and tax refund,” Nam said.

Nam, who is also General Director of Intimex, said the coffee exports have brought billions of dollars to the country over the last few years, but the achievements may become nonsensical, if enterprises continue meeting tax problems.

Sugar producers have also proposed to remove VAT, but because of another reason. They said they wanted to cut VAT rate to zero percent, because the move, if approved, would help them fight against the smuggled sugar.

At the meeting discussing the solutions for the sugar industry held recently, Nguyen Ba Chu, General Director of Bourbon Tay Ninh Sugar JSC, said the state management agencies have not applied any policies to support the sugar industry, though it has always been a big tax payer to the state budget.

Every year, the 41 sugar refineries, which have the turnover of VND22.5 trillion, pay VND2 trillion in VAT and corporate income tax to the state budget.

Chu said that about 400,000 tons of smuggled sugar, or 30 percent of the total sugar output, which does not bear tax, penetrates the domestic market every year, which harms the domestic sugar industry.

Bui Van Chuan, Deputy General Director of the Dak Lak Taxation sub-department said the agency still follows the regulations set by the general taxation department when refunding tax.

However, he said the Ministry of Finance will organize a meeting with the representatives from Dong Nai, Binh Duong, Dak Lak, Lam Dong provinces and associations to discuss the problems about which farm exporters complain.

The problems relate to the Ministry of Finance’s Circular No. 7527 with tighter regulations stipulating that enterprises would get tax refunds only when the taxation bodies check enough lawful invoices. Meanwhile, it takes months to fulfill that work.

Chuan said the Dak Lak taxation agency has been joining forces with relevant departments to clarify the tax frauds over the last three months, since the new circular was issued. They found that most of the frauds relating to VAT invoices occurred in HCM City, Binh Duong and Dong Nai, i.e the localities which do not make farm produce.

Kim Chi