Value added tax (VAT) incentives for traders in border-gate economic zones (EZs) should be limited to prevent tax fraud and evasions, the Ministry of Finance proposed. Many cases of taking advantage of the preferential policy for border-gate economic zones to get VAT tax refunds have been discovered.
Multiple traders have brought domestic goods from elsewhere into non-tariff zones and then launched them into the local market again under the form of duty-free goods so that they receive a VAT refund. Therefore, the finance ministry is seeking adjustments to the VAT preferential policy for border-gate EZs. The ministry suggested goods produced and consumed in non-tariff areas, those imported from abroad into non-tariff zones or exported from such zones to foreign countries should be exempt from VAT. As for domestic goods produced outside or in other functional areas in border EZs and brought into non-tariff areas, traders must make declarations and pay taxes on such items. However, if such items are brought there for export, they will enjoy zero VAT rate, provided they satisfy the requirements prescribed by the law on VAT, and pass the check before VAT refund. Meanwhile, goods and services from non-tariff areas launched into other functional areas in border-gate EZs or into the domestic market will be subject to VAT. This move is aimed at preventing VAT fraud and evasion, said the finance ministry in a draft decision on financial policy for border EZs. In addition, the ministry proposed investors in border zones should enjoy export and import tax incentives. Raw materials and components imported to serve the production projects in border-gate EZs (except the projects for assembly of cars and motorbikes, air conditioners, refrigerators, and some other electronic items) should be given a five-year import tax exemption.
Source: SAIGON TIMES DAILY
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