UPDATE 1-Vietnam to relax tax refund rules hurting coffee exports-traders
* Move may help to restore exports during the new crop season
* Some exporters have been reluctant to strike deals because of VAT issues
* Record crop looms in Vietnam (Adds quotes, detail)
By Ho Binh Minh
HANOI, Oct 3 (Reuters) - Vietnam has pledged to relax procedures for tax refunds on exports of coffee, rubber and cocoa that have held up shipments due to delays processing rebate claims, two traders who attended a meeting on the issue said on Thursday.
Although the government did not back calls to scrap the 5-percent value added tax (VAT) to avoid hold ups linked to cases of fraudulent claims, the move may help to restore exports during the new crop season which started this month.
Government officials could not immediately be reached for comment.
Supply constraints in Vietnam have failed to set London robusta futures alight, suggesting the market is more concerned about the prospect of a record crop in the world's top producer of the variety mainly used in instant coffee.
"The worry is that there will be more pressure on prices during harvests," said Moelyono Soesilo, purchasing and marketing manager at Taman Delta Indonesia, who trades Vietnamese beans.
Vietnam is forecast to export 50,000-60,000 tonnes (0.83 million to 1.0 million bags) of coffee this month, the lowest since October 2011, traders said on Tuesday.
January-October coffee exports fell 22 percent from a year ago to $2.23 billion, government data show. [ID:nL3N0HG0BZ
But still, benchmark London robusta futures sank to a three-year low at $1,596 a tonne last Friday before recovering to around $1,660 on bargain hunting. Vietnam's 2013/14 crop is forecast to hit 25 million 60-kg bags in the season to September 2014, a Reuters poll shows.
Some exporters have been reluctant to strike deals because of loopholes in Vietnam's system governing VAT payments and refunds for exportable goods.
Beans from the new season are being offered at premiums of $20 to $30 a tonne to London futures, suggesting that both farmers and exporters are reluctant to trade. Last October, exporters sought to sell at discounts of $20 to $30.
Exporters are supposed to pay the value added tax when buying coffee beans from local suppliers and get a refund once exports are completed.
But any move to abolish the tax would also require the approval of the National Assembly, a lengthy process in Vietnam. At present protracted tax auditing can make it difficult for exporting firms to continue buying commodities.
Firms with no record of tax problems and sound assets could be allowed to get early refunds, one of the traders said.
Some small suppliers received the VAT refunds from exporters but did not pay to the state, making it difficult for the exporters to claim tax refunds.
"They have to decide how to deal with this VAT problem," said a dealer in Singapore, who trades robustas from Vietnam and Indonesia. "Exporters don't want to buy beans from Vietnam because they are not sure if they can get the VAT back." (Writing and additional reporting by Lewa Pardomuan in Singapore; Editing by Ed Davies)
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