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Exports of wood products is forecast to reach US$16.9 on time,” he said.
billion in 2025, ranking sixth among Vietnam's export categories. Liem further noted that both enterprises and small traders
The industry provides direct jobs for over 500,000 workers are still obliged to declare and pay VAT even on minimally
and sustains millions of smallholder tree growers. processed timber, increasing costs and paperwork.
These numbers point to an acute liquidity challenge. In his words, “These procedures consume enormous time
Preliminary figures from VIFOREST indicate that timber and resources, but the refunds remain out of reach. This has

enterprises are still waiting for VAT refunds worth around paralysed business cash flows and put many companies at risk.”
VND6.1 trillion (US$250 million). The delay is linked to current These obstacles are driving a troubling shift. Some
procedures that require refunds to be processed only after companies now prefer to import timber rather than purchase
thorough review. from domestic plantations to avoid VAT refund complications.
On paper, the system is meant to secure the state budget. This undermines demand for local wood, stripping millions of
In practice, it has stalled refund approvals for compliant farmers of stable income and is a dis-incentive for reforestation.
businesses. Thanh cautioned that the government might ultimately face
“Many companies have complete and legitimate dossiers, the paradox of bailing out commercial plantation forests, a
yet they are still asked to provide additional clarifications over scenario entirely at odds with Vietnam's sustainable forestry

and over again,” noted Cao Xuan Thanh, chief of office at goals.
VIFOREST. VIFOREST's message is clear: resolving VAT refund issues
He stressed that refund processing often exceeded the is not merely about tax administration. It is about preserving
statutory deadline, causing serious cash flow disruption. national reputation, protecting farmers' livelihoods, and securing
Thanh pointed out that the requirement to trace raw material the industry's competitiveness in a global market increasingly
origins back to individual households is especially unrealistic. focused on sustainability.
“A single export shipment may be sourced from dozens “If these obstructions are not lifted, we risk losing both

of growers across multiple provinces,” he explained. “The domestic and international trust,” Thanh emphasised.
verification process becomes unworkable, and that is where In its petition, the Association stresses that timely VAT
enterprises get stuck.” reform will immediately free up liquidity, reduce exposure
The consequences are immediate. Exporters are forced to legal risks, and enhance compliance with international
to advance 10percent VAT on input materials while awaiting traceability standards.
refunds, eroding their capacity to rotate capital.
This hits small- and medium-sized firms the hardest. With
industry-wide profit margins averaging only five to seven
percent, the sector loses an estimated VND500-600 billion Patina Construction & Development

($20-25 million) annually due to refund.
Nguyen Liem, Vice Chairman of VIFOREST, added that
product classification is another barrier. He observed that
plantation timber after harvest, such as logs, sawn timber,
peeled veneer or woodchips has not been clearly recognised
as “primary processed” goods. “Because of this ambiguity,
exporters accumulate large VAT credits that cannot be refunded