As highlighted in the previous alert
, Law No. 106 (effective from 1st July 2016) has abolished a number of cases of VAT refunds; accordingly, those enterprises having outstanding creditable input VAT for at least 12 consecutive months (or for at least 4 consecutive quarters) are generally no longer eligible to apply for VAT refund – except for cases of export activities, or enterprises having new investment project in different provinces etc.
By this Official Letter, MOF has provided further guidance with regards to the application time of this new rule. Specifically, if the enterprises have accumulated creditable input VAT up to the period before July 2016, and satisfy the conditions for tax refund under the old regulation (Point 1, Article 18 of Circular 219/2013/TT-BTC), then the application dossier for tax refund for this period shall be still accepted by the tax authority.
Although the OL does not mention it, the enterprise should be well aware of how to document the proposed tax refund amount in the relevant tax period in order to meet the requirements of VAT refund dossier (you may refer to a number of useful guidance on such documentation in OL No. 4943/TCT-KK dated 23 November 2015 and OL No. 2035/TCT-KK dated 13 May 2016 by the General Department of Taxation guiding the supplementary VAT declaration in case of tax refund).
Interest rate for late payment
According to Point 3, Article 3 of Law No.106, the interest rate for late tax payments has been reduced from 0.05%/day to 0.03%/day since 1st July 2016.
OL 10315 has provided that, if the tax payment incurred before 1st July 2016 but has not paid after this date, the interest rate of 0.03%/day would be applicable since 1st July 2016.
In case of under-declaration of tax liability of period before 1st July 2016, but being detected by the competent authorities or self-identified/declared by the taxpayer after 1st July 2016, then the interest rate of 0.05%/day (or the prevailing rate as of the relevant regulation at the time) shall be applied up to 30th June 2016, and the rate of 0.03%/day shall be applied as from 1st July 2016 to the date the payment is remitted to the State Budget.
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