Phan Quynh Anh, Director of the Dong Duong Tea and Coffee Production Company in HCM City said her company has halted the operation because it has run out of money, while the next pepper crop is coming.
The company’s problem is that it needs to get the VAT refund to have capital to do business. However, Anh doesn’t know when she would get the refund.
Anh lodged a complaint to the Binh Thanh district taxation agency and she was told that 3 of the invoices submitted to the taxation agency were invalid, because the partner enterprises have stopped operation.
“Why blame us on the disappearance or the operation suspension of the companies,” she questioned.
However, no one has answered her.
A pepper exporter in district 12, HCM City said it’s to blame the state management agencies on the disappearance of enterprises, while it’s not the responsibility of businesses to find out where the enterprises have gone.
“We are the victims of the enterprises. We are not the culprits. Why have we been punished for this?” he said.
A series of other farm produce exporters have also been facing the same problem. A businessman even has threatened to sue the taxation agency to the court. He said that his company is at the point of death because of the lack of capital, while the money still has got stuck at the taxation agency.
Complicated procedures push businesses to the death
The problems have arisen from the Dispatch No. 7527, in which the Ministry of Finance requests local agencies to strengthen the inspection over the tax payment by enterprises. The document asked the taxation agencies to pay the special attention to the farm, fishery and seafood produce export companies which are believed to “have problems.”
The dispatch clearly stipulates that export enterprises will get the tax refund only if the trade intermediate enterprises have declared and paid tax already.
Tran Duc Tung, Chief Secretariat of the Pepper Association Office, has confirmed that the association’s member companies are meeting big difficulties.
Tung said it’s very difficult to collect farm produce materials from producers. In most of cases, export companies have to buy from intermediaries – the merchants who collect materials from trade companies or farmers.
This means that farm produce go through a lot of intermediary parties before reaching the last buyers – export companies. Therefore, export companies will suffer if they have to wait for the taxation agencies to check all the invoices relating to all the intermediary parties.
Also according to Tung, an export company reportedly still awaits the tax refund of VND50 billion, while the luckiest company still has VND3 billion stuck at the taxation agency. Meanwhile, they are seriously lacking capital for business.
The pepper association in August 2013 lodged a complaint to the Ministry of Finance and the General Department of Taxation, requesting to apply a flexible mechanism in VAT refund – “refunding first and verifying later” – to rescue farm produce exporters.
However, the urgent proposal has not got reply.