After major tax refund fraud cases like Thủ Đức House, Vietnam’s tax authorities have tightened anti-fraud measures. As a result, even tax officers themselves are now more cautious when signing refund decisions, leading to delays in legitimate refund processing for compliant businesses — particularly exporters such as those in the natural rubber industry.
VAT Refund Fraud and the “Carousel” Scheme
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In Europe, a common VAT scam known as “Carousel Fraud” or “Missing Trader Intra-Community (MTIC) Fraud”has caused significant losses to national treasuries. The scheme exploits the zero-rated VAT on intra-EU cross-border trade and the credit refund system on domestic sales.
A simplified example from the Netherlands illustrates the process:
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Company A (France) sells to Company B (Netherlands) – no VAT due (intra-EU transaction).
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B sells to C domestically with a 21% VAT. B collects the tax but fails to remit it to the government.
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C resells to D, and D exports the goods, claiming a VAT refund.
If B disappears before paying its collected tax, the government suffers a loss — even as it refunds D.
This cyclical pattern, where missing traders vanish with collected VAT, mirrors the continuous rotation of a carousel — hence the name. The larger the transaction, the greater the tax loss.
The Thủ Đức House Case: A Turning Point
The Thủ Đức House scandal, one of Vietnam’s largest VAT refund fraud cases, exposed systemic vulnerabilities.
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The company collaborated with Trịnh Tiến Dũng, who set up fake companies to issue bogus invoices for electronic component exports.
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Thủ Đức House then filed fraudulent VAT refund claims for exported goods that never existed.
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The scam defrauded the state of over 537 billion VND (≈ USD 22 million).
This case prompted nationwide scrutiny. Tax authorities now subject refund claims to more rigorous verification, particularly in high-risk sectors such as export trade and investment projects.
Domestic VAT Refund Manipulation (Example: SAPL Case)
Not all fraud involves exports. Domestic companies can also inflate input VAT through fake invoices.
Example:
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SAPL (Southern Aviation Petroleum Depot JSC) submitted 14 false invoices from contractor Thiên Kim Co., claiming 6.7 billion VND in VAT refunds for uncompleted construction works.
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This case, among many others, underscores how fake input invoices distort refund legitimacy and drain public funds.
Why Exporters (Especially Rubber Firms) Face Long Delays
Since late 2021, many Vietnamese natural rubber exporters have faced prolonged VAT refund delays. Tax authorities now demand verification of the entire supply chain, from traders to smallholders.
While this protects state revenue, it burdens legitimate exporters with:
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Extended audits and documentation demands;
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Cash flow strain, as refunds are crucial for operating capital;
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Uncertainty in tax compliance timing.
Authorities argue this step is necessary because the riskiest point in the value chain lies in the first purchasing levels (F1, F2)—small traders or unregistered collectors who may disappear before paying VAT.
In contrast, processing factories (F3) pose lower risk due to larger investments and permanent business premises. Still, without a fully verified upstream chain, refunds are withheld.
Legal Accountability for Tax Officials
Under Article 219 of Vietnam’s Penal Code (2015, amended 2017), officials mismanaging state funds face up to 20 years imprisonment for causing significant losses.
Notable cases include:
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Nguyễn Thị Bích Hạnh, former Deputy Director of HCMC Tax Department – sentenced to 4 years in prison(2023) for her role in the Thủ Đức House case.
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Vương Đức Hải, tax officer in Hà Tĩnh – prosecuted for illegal invoice trading (~1 billion VND gain).
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12 former An Giang tax and customs officials – imprisoned (2018) for fake VAT invoice schemes causing 35+ billion VND in losses.
Conclusion
Following such scandals, tax authorities are now extremely cautious in processing VAT refunds, prioritizing anti-fraud over speed.
While this ensures transparency and compliance, it has unintentionally slowed refunds for honest businesses — particularly rubber exporters, who now face cash flow challenges due to delayed reimbursements.