Synchronizing solutions to detect early and strictly handle tax fraud

Could you please tell me what "tricks" of VAT refunding have been discovered and successfully fought by the authorities in recent years?

- There are quite a lot of VAT refund tricks and cheat that have been exposed by the authorities in the past time, typically forging false export records of exported goods and services; rotate goods for export many times for one shipment; establish fake businesses just to sell invoices to other businesses in order to legitimize the input of enterprises buying invoices (short selling invoices without goods or services) or just to provide input invoice to legalized an enterprise selling smuggled goods…

The fraud case discovered by the investigation agency and brought before the law against Phat Petroleum Trading Joint Stock Company in Hai Phong in September 2020 is a typical example of the establishment of a fake business to cheat input VAT.

Strictly implement solutions to prevent legal violations in VAT refund

Photo: S.T

The situation of VAT fraud has been complicated for many years, so what is the effective solution to fight against VAT refund fraud, sir?

We've made this very clear in recent times. First of all, promptly amending and supplementing legal regulations on VAT and tax administration to close legal loopholes and prevent fraudsters from taking advantage of state budget. Second, strengthening and improving the effectiveness of professional measures to monitor and detect enterprises with signs of violations of the law in general and the law on VAT refund in particular. The third is to improve efficiency and innovate tax inspection and examination methods. The fourth is to strengthen the coordination between state agencies in the fight against tax crimes and finally to strictly and promptly handle violations of the tax law.

At present, both administrative and criminal sanctions for VAT fraud are very strict. In particular, the Law on Tax Administration, Decree 125/2020/ND-CP stipulating penalties for administrative violations on taxes and invoices, and the Penal Code all have very clear provisions on violations and  penalties for tax violations in general and VAT in particular. However, what is important is how the organization works to achieve even greater efficiency.

In fact, there are places and times when the efficiency of crime detection is not high and not timely. In addition, the attraction of illegal money is so great that it has blinded a part of taxpayers, so the situation of VAT refund fraud has decreased recently but is quite complicated.

In my opinion, in order to minimize this fraud, in the coming time, it is necessary to improve the efficiency of tax inspection and investigation and the investigation work of the authorities to detect early and handle resolutely. promptly and thoroughly VAT fraud

Identification and solutions to combat value-added tax refund fraud- Last post: Synchronize solutions to early detection and strict handling of fraud

 In addition to legislation, what do you think the authorities need to do to detec and handle this violation?

- In my opinion, there are two important things that need to be implemented to further improve the efficiency of detection and handling. That is, management agencies and functional forces need to improve the effectiveness of detecting fraud through professional measures based on applying risk management techniques and current information technology performed by a team of civil servants with integrity and high professional qualifications.

Concurrently, management agencies need to promote, strengthen and innovate tax propaganda so that businesses and people understand tax obligations and understand the consequences of tax violations in general and VAT legislation in particular. Especially, propaganda for the masses to support and actively participate in the fight against tax crimes.

Thank you Sir!

Lawyer, Journalist Dang Thi Han Ni:

The cases of  VAT refunds are all big cases, enterprises have done for a long time, with the amount of tax appropriated by the state budget is very large, there are cases up to hundreds of billions of dong. Thereby, it shows that the tricks of enterprises to cheat on VAT refund are very sophisticated. Therefore, in order to prevent this behavior, tax refund officers must quickly detect irregularities of enterprises.

For instance, a case of Thuduc House which specializes in real estate, but completes procedures for refunding hundreds of billions of VND in VAT related to the export of electronic chips. This is considered an unusual sign to question when businesses carry out tax refund procedures. Currently, at the request of tax authorities, most businesses use electronic invoices. Personally, i think the management of tax invoices with authentication codes, or management by QR codes will better manage invoices, input and output goods; limit short-selling and obtaining money from the state tax.

Mr. Nguyen Vinh Huy, Founding Chairman of Thinh Tri Law Group, Vice Chairman of Notary Association of Vietnam:

It is necessary to promote propaganda activities and support taxpayers, perfect the VAT policy in the direction of: uniformly applying a VAT calculation method which is a deduction method, thereby coming to a unified type of VAT invoice; narrowing the object of tax refund is likely to lead to fraud, as in the case of exporting goods and services....

In addition, completing the VAT collection management method by applying with maximum efficiency the achievements of information technology to the management of VAT collection, connecting the computer network across the country in order to check and compare invoices, input and output documents; complete the VAT collection management process in a simple, scientific and effective manner; reviewing loopholes in VAT refund easily to recognize any acts of the state's budget withdrawal. The payment via banks and computerization of financial - accounting work of enterprises can be considered as one of the mandatory conditions when calculating VAT by the deduction method. In parallel, it is necessary to reward appropriately, strictly discipline in the collection and observance of tax laws.

In addition, when there is an abnormality in the VAT invoice reporting period, there must be an inspection and examination immediately and promptly to verify and clarify for remote inspection and prevention. It should be restoring the VAT declaration with the list of purchases and sales, when declaring tax. This regulation forces the accountant to type which unit the invoice number, date, amount of goods, tax are traded with ? It is also very easy for the Tax Office to quickly check in case of unusually high turnover.

With the current sanctioning regulations, in my opinion, it is not enough of a deterrent, so to prevent these profiteering acts, in addition to increasing fines and imprisonment, the management agency should supplement add regulations to minimize fraud.

Mr. Nguyen Thai Son, Director of SAI GON TAX ADVISORY CORPORATION., Honorary member of Hubatax:

Research on the process of detecting tax refund fraud, in the long run, it shows that the tax authorities' countermeasures are only limited to records with small tax refunds, small business. Recently, detected tax frauds show that tricks are increasingly sophisticated as well as the businesses into a system with many classes operating in many localities, for clear purposes evidently concealing tax refund fraud.

I think that one of the shortcomings of the tax authorities is the way in which they assign officers to control VAT refund records. Officers are in charge of all kinds of work on tax administrative procedures of a series of businesses, must always be in charge of controlling VAT refund records of some enterprises. That is, there is no dedicated staff for the control of tax refund records. Therefore, there is no deep accumulation of knowledge and techniques to control tax refund records; there is no time to review, trace and verify the information in the records.

Accordingly, as a solution to combat loss of VAT refund, tax authorities should study and organize specialized teams to handle tax refund records in every single district and city. Thus, it is possible to improve the efficiency of controlling each file and build a system to fight tax refund fraud, connecting with the whole country and with other authorities.

Le Thu-Thu Diu (recording)

H.Nu (performing)

CUSTOMSNEWS