Amending regulations for proactive, responsible tax officials

Dr. Phan Hoai Nam

Could you share your assessment of the positive outcomes and limitations of the tax refund process in recent years?

In recent years, we have observed positive progress in the tax refund process. This is evident through strengthened tax management, a reduction in tax evasion, and increased revenue for the state budget. These results reflect the concerted efforts of both the tax system and the business community.

However, it is undeniable that delays in tax refunds still occur, as reported by businesses. These issues may arise from complex procedures, incomplete management systems, or delays from related parties, which have created challenges not only for businesses but also impacted the economy by raising business costs and disrupting cash flow.

To address these challenges, we must continue to streamline the tax refund process, simplify procedures, and enhance transparency in tax management. Furthermore, collaboration between businesses and tax authorities is crucial to resolving tax refund issues in an effective and transparent manner.

One key reason for tax refund delays is the presence of high-risk factors related to invoice fraud in tax refund dossiers. What is your assessment of this issue?

In my view, a major factor causing tax refund delays is the high risk of invoice fraud in refund applications. This can be seen in cases where companies declare illegal input invoices or engage in VAT fraud through invoicing schemes.

This issue not only slows down the verification and inspection process but also compromises transparency and fairness in the tax system. Additionally, it creates an unhealthy and unfair business environment, negatively impacting state revenue.

To combat this, we need to strengthen monitoring and inspection of business activities, particularly in sectors with high invoice fraud risks. Leveraging information technology and artificial intelligence could also help detect and prevent invoice fraud more effectively.

I believe that through close cooperation between the tax authorities and the business community, we can mitigate tax refund delays, improve cash flow management for businesses, and foster a healthier, more transparent, and fair business environment.

What recommendations would you offer to regulators and businesses in implementing solutions to accelerate tax refunds while ensuring no budget losses?

For regulatory bodies, I believe enhancing transparency and fostering consensus with businesses throughout the tax collection and refund process is essential. This can be achieved by improving procedures, simplifying processes, and using technology to optimize tax management. Regulatory authorities should also intensify monitoring and checks to effectively prevent invoice fraud.

Businesses, for their part, need to comply with tax policies and provide accurate, complete information to tax authorities. They should also conduct self-audits and review their tax refund documents to ensure the accuracy and legitimacy of their declared information.

The ongoing amendment to the VAT Law includes a proposal stating that 'Tax officials bear responsibility for issuing refunds in accordance with their duties, abiding by tax and tax management laws, based on documents provided by taxpayers and relevant information from authorized government bodies.' How do you foresee this proposal impacting the tax refund process if legislated?

The proposal to amend the VAT Law clarifies the responsibility of tax officials in the tax refund process. Under this draft, tax officials would not be criminally liable if they unknowingly process inaccurate or misleading information outside their purview. I see this as a step toward balancing legal responsibilities while enabling tax officials to perform their duties with greater professionalism, flexibility, and efficiency.

If enacted, this regulation could change tax officials’ approach to tax refunds. Rather than being overly cautious due to perceived risks, officials could proactively fulfill their duties with heightened responsibility, advancing administrative tax reform and supporting businesses better. Alleviating the mentality of 'no action, no error' would create a positive working environment and encourage initiative among tax officials.

However, it is crucial to ensure that the exclusion of criminal liability does not reduce diligence and transparency in tax officials' work. This is especially important as transparency and anti-fraud measures are increasingly emphasized. Establishing rigorous control and supervision mechanisms will be essential to ensure this regulation is implemented fairly and effectively.

Thank you very much for your insights!