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Commercial banks wrongfully taxed for imported dollars
An uncommon thing in the history of the banking system happened in Vietnam for several days: customs agencies imposed taxes on the dollars imported by commercial banks, and the imposition has been found as a mistake as the customs agencies misunderstood the legal provisions.
The story began when commercial banks complained that they were imposed VAT on the dollars they imported.
On January 15, the East Asia Bank (EAB), one of the biggest overseas remittance service providers, imported US $20 million in order to pay to clients and it was asked by customs agencies to pay 10% of VAT for the money imports.
Nguyen Thi Kim Loan, Deputy Head of EAB’s Currency Trading Division, said that previously, all the imported foreign currencies were not subject to import tax and VAT.
Loan said that EAB imported foreign currencies to pay the overseas remittance to clients. She said EAB would not be able to collect VAT from clients, while it could not pay in VND as VND will be refused by clients.
The HCM City Branch of Vietcombank also reported the same thing. Vietcombank imported US $10 million and it was asked to pay VND 17 billion in VAT.
Deputy General Director of a joint stock bank headquartered in HCM City said that the bank planned to import US $1 million in order to satisfy the demand from individuals and businesses, but it has cancelled the plan as it found other banks imposed VAT.
Customs agencies said that they needed to collect VAT on imported foreign currencies as the Circular No. 131 promulgated by the Ministry of Finance on December 26, 2008, guiding the implementation of the VAT Law, stipulated that bank notes were subject to 10% VAT.
The complaints by commercial banks had immediately raised protests from other commercial banks.
The General Director of Vietcombank, Nguyen Phuoc Thanh, said that the foreign currencies banks import are not a kind of commodity, therefore, they must not be the subject to VAT.
A senior official of the State Bank of Vietnam on January 16 said that he was very surprised on the collection of VAT on foreign currency imports in cash. He said that the taxation may cause chaos to the foreign currency market, a very sensitive market. He said he would discuss with the Ministry of Finance immediately about the imposition.
Deputy Head of the HCM City Customs Agency Le Kien Trung told the press that the fault was made by customs agencies as they misunderstood the legal documents. In fact, the said above document that customs agencies referred to when imposing VAT on imported dollars said that the papers used for printing bank notes, not foreign currencies, are subject to VAT.
Trung said that the city’s customs agency have sent an urgent document to the General Department of Customs to consult about how to deal with the case. Trung has promised that after receiving the reply from the general department, his agency will settle the case of wrongful imposition on Vietcombank’s foreign currencies imports. Meanwhile, the imports of foreign currencies by commercial banks will still be carried out as usual.
The demand for importing foreign currencies to serve the demand for payment and overseas remittance payment to clients has been increasing from some commercial banks. However, some banks have stopped importing foreign currencies after they heard about the 10% imposition.
The Ministry of Finance on January 17 had to send urgent dispatches to customs agencies, explaining the regulations in the VAT Law effective as of January 1, 2009. The dispatch confirmed that no VAT will be imposed on foreign currencies imports.
VNE
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