From July 1, 2025, when shall a business establishment have the residual VAT on the investment project carried forward to the next period in Vietnam?

From July 1, 2025, when shall a business establishment have the residual VAT on the investment project carried forward to the next period in Vietnam?

Pursuant to Point b, Clause 2, Article 15 of the Law on Value-Added Tax 2024 (effective from July 1, 2025), the regulation regarding business establishments not being allowed to receive VAT refunds but are allowed to carry forward the uncredited tax amount to the next period in the case of an investment project is as follows:

- The investment project of the business establishment does not contribute sufficient charter capital as registered at the time of submitting the tax refund dossier; engages in business in industries requiring business investment conditions without meeting the business conditions as prescribed by investment law, or fails to maintain adequate business conditions during operations, except for investment projects in their initial investment phase as prescribed by investment law and special laws that do not require a request to the competent state agency for a business license in industries requiring business investment conditions, and investment projects that under investment laws and special laws do not require a business license for investment industries requiring business conditions;

- Investment projects for the exploitation of natural resources and minerals (excluding projects for the exploration, surveying, and development of oil and gas fields as specified at Point a, Clause 2, Article 15 of the Law on Value-Added Tax 2024) and investment projects producing products that are exploited natural resources and minerals, which have been processed into other products as specified in Clause 23, Article 5 of the Law on Value-Added Tax 2024.

From July 1, 2025, when shall a business establishment have the residual VAT on the investment project carried forward to the next period in Vietnam? (Image from Internet)

What are regulations on refund of VAT on investments in Vietnam?

Pursuant to Point a, Clause 2, Article 15 of the Law on Value-Added Tax 2024 (effective from July 1, 2025), the regulation regarding VAT refunds for investment projects is as follows:

- Business establishments that have registered to pay VAT using the tax credit method and have investment projects (new investment projects, expanded investment projects) as prescribed by investment law (including investment projects divided into multiple investment stages or components, except for investment projects not forming fixed assets of the enterprise) that are in the investment phase or projects searching for exploration, and development of oil and gas fields in the investment phase, where the input VAT arises during the investment period but has not yet been refunded, the business establishment shall offset against the payable VAT of ongoing production and business activities (if any). If, after offsetting, the input VAT of the investment project that has not been fully credited is 300 million or more, a VAT refund is available.

+ In cases where the investment project is completed (including projects divided into multiple stages, investment components with completed investment stages, components) but the business establishment has not yet implemented a VAT refund arising during the investment phase (completed investment components, investment stages), the business establishment shall submit a VAT refund dossier as prescribed within one year from the date the investment project or investment stage, investment component is completed.

+ The date of project completion or completion of the investment stage, investment component is the date revenue arises from the investment project or the date revenue arises from the investment stage, investment component. Revenue specified in this clause does not include revenue arising during trial operation, financial activity revenue, or liquidation of raw materials of the investment project;

What are regulations on credit-invoice method in Vietnam?

Pursuant to Clause 1, Article 11 of the Law on Value-Added Tax 2024 (effective from July 1, 2025), the credit-invoice method is regulated as follows:

- The VAT payable according to the tax credit method is the output VAT minus the deductible input VAT;

- The output VAT is the total VAT on goods and services sold recorded on the VAT invoice.

The VAT on goods and services sold recorded on the VAT invoice is determined by the taxable price of goods and services sold multiplied by the VAT rate applicable to those goods and services.

In cases where the invoice records the payment price as the price that includes VAT, the output VAT is determined by subtracting the taxable price of VAT as defined at Point k, Clause 1, Article 7 of the Law on Value-Added Tax 2024 from the payment price;

- The deductible input VAT is the total VAT recorded on the VAT invoice for purchasing goods, services, VAT payment documents for imported goods, or VAT payment documents in the case of purchasing services specified in Clauses 3 and 4, Article 4 of the Law on Value-Added Tax 2024 and meets the conditions specified in Article 14 of the Law on Value-Added Tax 2024.