Three provincial officials charged with illegally refunding VAT for solar power project

Three officials from Binh Phuoc province's Tax Department in southern Vietnam have been investigated for “showing a lack of responsibility, causing serious consequences” in a case involving a value added tax (VAT) refund to Loc Ninh 3 Energy JSC.

Loc Ninh 3 Energy JSC is the developer of Loc Ninh 3 solar power plant in Loc Tan commune, Loc Ninh district, Binh Phuoc province.

Those investigated are Nguyen Duy Khanh, deputy director of the provincial Tax Department; Tran Van Dinh, head of the department’s inspection division 3; and Pham Quang Vinh, deputy head of the department’s division of estimation and legal affairs.

According to initial investigation results, from October to December 2020, Loc Ninh 3 Energy JSC completed the construction of and put into commercial operation Loc Ninh 3 solar power plant on an area of 149.59 hectares of production forest land owned by Loc Ninh Rubber One Member Limited Liability Company.

This area was not subject to any decisions from competent authorities regarding land recovery, land allocation, land lease, or conversion of production forest land to land for energy projects. It was not granted a construction permit or an in-principle investment approval.

Therefore, Loc Ninh 3 Energy JSC’s investment in the plant has violated investment regulations, said the investigators.

According to the Ministry of Public Security's investigative agency, based on Circular No. 130/2016 issued by the Ministry of Finance, Loc Ninh 3 project was not eligible for VAT refund and its unclaimed VAT would be forwarded to the next taxation period.

On April 24, 2021, Loc Ninh 3 Energy JSC submitted a request to the Binh Phuoc Tax Department, asking for refund of over VND145 billion ($5.9 million) in VAT from its investment in Loc Ninh 3 solar power plant.

On May 25, 2021, Khanh, deputy director of the provincial Tax Department, signed a notice to transfer Loc Ninh 3 Energy JSC’s VAT refund request to the status of "examining first, refunding later". On May 27, 2021, he signed a decision to establish an inspection team led by Phan Van Sang, a staff member of the inspection division 3.

On July 14, 2021, Sang signed an inspection report, and on January 15, 2021, he signed a VAT refund proposal to submit to Dinh, head of the department’s inspection division 3, for approval.

On July 19, 2021, Vinh, deputy head of the division of estimation and legal affairs, inked a document certifying the inspection of the VAT refund request by the inspection division 3, confirming that Loc Ninh 3 Energy JSC had all documents and met the conditions for VAT refund in line with regulations.

On July 19, 2021 Sang prepared and signed a proposal on issuance of a VAT refund decision for Loc Ninh 3 Energy JSC, which was approved by Dinh and Khanh.

On July 20, 2021, Khanh signed the VAT refund decision and issued an order to refund over VND145 billion ($5.9 million) in VAT to Loc Ninh 3 Energy’s account at Bangkok Bank’s Ho Chi Minh City branch.

The investigative agency has determined that the Binh Phuoc Tax Department’s decision to grant a VAT refund to Loc Ninh 3 Energy JSC for its Loc Ninh 3 solar power plant project violated legal regulations concerning VAT refunds for investment projects.

This decision resulted in a loss of over VND145 billion ($5.9 million) to the state budget, it said.