Tourists to be given VAT refunds

International tourists will enjoy value-added tax (VAT) refunds when they purchase goods in Vietnam under a draft currently being considered by the Ministry of Finance.

Under the pilot plan approved by Prime Minister Nguyen Tan Dung in July, foreign tourists who buy goods at certain airports, tourism areas and shops in big cities will receive a 10 percent refund on the tax they paid.

Goods purchased by foreigners are considered export commodities so every purchase valued at more than VND2 million per receipt which is issued within 30 days of their exit from Vietnam will benefit from the tax refund.

"The VAT refund aims to promote tourism, increase foreign currency in the country and encourage on-the-spot exports," said head of the ministry's Import-Export Tax Department Lo Thi Nhu.

The ministry has issued clear criteria to eligible businesses in Hanoi, HCM City and traditional trade villages, Nhu said.

Vietnam has 161 border-gates including six international airports. Under the pilot phase of the plan, Noi Bai and Tan Son Nhat International airports will be selected for inclusion in the project from April 2012 to June 2016 as they have the country's highest numbers of passengers. Security barriers at the airports will help ensure supervision of goods transported under the mechanism.

"The pilot project will help authorities evaluate the mechanism's effectiveness," she said.

Under the programme, foreign tourists will not receive a full tax refund because they will have to pay tax agency fees, meaning they will not receive more than 10 percent of the total tax paid.

Surveys from the Vietnam Administration of Tourism showed that foreign visitors stayed in Vietnam for an average of nine days per visitor and they spend about US$72.5 a day.

Tourism experienced the highest growth when compared to other services in recent years after transport, finance, insurance and telecommunications.

The country expects to welcome 5.5 million international tourists this year. In the first eight months of the year, the number reached nearly 4 million, 18 percent higher than in the same period last year. (Source: VOV/VNA)