Vietnam: Does the tax administration include value-added tax refund?

Vietnam: Does the tax administration include value-added tax refund?

According to Article 4 of the Law on Tax Administration 2019, it is stipulated as follows:

Contents of Tax Administration

1. Tax registration, declaration, payment, and tax determination.

2. Tax refunds, tax exemptions, tax reductions, and non-tax collections.

3. Freezing tax debts; writing off tax debts, late payment interest, fines; exemption from late payment interest, fines; not charging late payment interest; tax payment deferral; installment payment of overdue taxes.

4. Managing taxpayer information.

5. Managing invoices and documents.

6. Tax inspection, tax examination, and implementing measures to prevent and stop violations of tax laws.

7. Enforcing administrative decisions on tax administration.

8. Sanctioning administrative violations related to tax administration.

9. Resolving tax-related complaints and denunciations.

10. International cooperation on tax.

11. Educating and assisting taxpayers.

Thus, value-added tax refund is one of the components of tax administration.

Vietnam: Does the tax administration include value-added tax refund? (Image from the Internet)

What is the value-added tax refund in Vietnam?

According to Article 13 of the Law on Value-Added Tax 2008, as amended by Clause 7, Article 1 of the Amended Law on Value-Added Tax 2013, it is as follows:

Cases of Tax Refund

1. A business entity paying value-added tax by the credit method which has input value-added tax not fully credited in the month or quarter is allowed to carry it forward to the next period; if after a cumulative period of at least twelve months from the first month or at least four quarters from the first quarter when there is uncredited input value-added tax, and still there is uncredited input value-added tax, the business entity is entitled to a tax refund.

In the case of a business entity registered for value-added tax payment by the credit method with a new investment project in the investment stage with input value-added tax of goods and services purchased for the investment that has not been credited and the remaining tax amount is 300 million dong or more, it is entitled to a value-added tax refund.

2. A business entity in a month or quarter exporting goods and services with input value-added tax not credited from 300 million dong or more is entitled to a monthly or quarterly value-added tax refund.

3. A business entity paying value-added tax by the credit method is entitled to a value-added tax refund when transferring ownership, converting business, merging, consolidating, splitting, or dissolving when there is overpaid value-added tax or uncredited input value-added tax.

4. Foreigners and overseas Vietnamese holding passports or entry papers issued by a competent foreign authority are entitled to tax refunds for goods purchased in Vietnam and taken abroad upon exit.

5. The value-added tax refund for programs and projects using non-refundable official development assistance (ODA) or non-refundable aid, humanitarian aid is as follows:

a) The program or project owner, main contractor, or organization designated by the foreign donor to manage the program or project using non-refundable ODA is refunded for the value-added tax paid for goods and services purchased in Vietnam for the program or project;

b) Organizations in Vietnam using non-refundable aid funds, humanitarian aid from foreign organizations or individuals to purchase goods and services for non-refundable aid programs and projects, humanitarian aid in Vietnam are refunded for the value-added tax paid for these goods and services.

6. Entities entitled to diplomatic immunity privileges under the law on diplomatic immunity purchasing goods and services in Vietnam for use are refunded the value-added tax stated on the value-added tax invoice or payment document with value-added tax inclusive price.

7. A business entity with a value-added tax refund decision from a competent authority according to the law and in cases of value-added tax refunds under an international treaty that the Socialist Republic of Vietnam is a signatory.

Thus, according to the above regulations, it can be simply understood that a value-added tax refund is the process whereby the tax authorities reimburse all or part of the value-added tax that the enterprise has paid to the state budget.

Moreover, the circumstances under which value-added tax refunds are granted, as well as the procedures, must comply with legal regulations.

What are regulations on value-added tax refund in Vietnam according to the Law on Value-Added Tax 2024 from July 01, 2025?

According to Article 15 of the Law on Value-Added Tax 2024, stipulating the value-added tax refund according to the Law on Value-Added Tax 2024 from July 01, 2025:

[1] Tax Refund for Exports is stipulated as follows:

- A business entity in a month or quarter exporting goods and services with uncredited input value-added tax from 300 million dong or more is entitled to a monthly or quarterly value-added tax refund, except for goods imported and then exported to another country;

- A business entity in a month or quarter having both exported goods and services and domestically consumed goods and services must separately account for the input value-added tax used for the production and business of exported goods and services;

If it cannot be separately accounted for, the input value-added tax of exported goods and services is determined by the proportion of the revenue from exported goods and services over the total tax-inclusive revenue of the tax refund period. The tax refund period is determined from the VAT period with continuously uncredited input value-added tax not yet refunded to the VAT period with a tax refund request.

The input value-added tax of exported goods and services (including separately accounted input value-added tax and the input value-added tax determined according to the above proportion) if after offsetting with the value-added tax due on domestically consumed goods and services remains from 300 million dong or more, the business entity is entitled to a refund for exported goods and services.

The refunded value-added tax of exported goods and services shall not exceed 10% of the revenue from exported goods and services for the tax refund period. Unrefunded input value-added tax from the previous refund period exceeding 10% of the revenue from exported goods and services shall be credited to the following tax period to determine the refunded value-added tax for exported goods and services in the next refund period.

[2] Tax Refund for Investment is stipulated as follows:

- A business entity registered to pay value-added tax by the credit method with an investment project (new investment project, expanded investment project) according to the investment law (including investment projects divided into multiple investment stages or segments, except for investment projects that do not form the fixed assets of the enterprise) in the investment stage or oil and gas exploration and development project in the investment stage with input value-added tax incurred during the investment stage yet to be refunded, the business entity shall offset with the payable value-added tax on ongoing production and business activities (if any).

After offsetting, if the input value-added tax of the investment project is uncredited from 300 million dong or more, it is entitled to a value-added tax refund.

If the investment project has been completed (including divided investment projects with completed investment segments or stages), but the business entity has not implemented the value-added tax refund incurred during the investment stage (completed segment, investment stage), the business entity must file a value-added tax refund application in accordance with regulations within one year from the date the investment project or investment stage or segment is completed.

The date the investment project or investment stage or segment is completed is the date the investment project or investment stage or segment revenue arises.

The revenue specified in this clause does not include revenue generated during the trial run, financial activities, or liquidation of inventoried materials of the investment project;

- A business entity is not entitled to a value-added tax refund but may carry forward the uncredited tax of the investment project according to investment law to the next period in the following cases:

+ The business entity's investment project does not contribute the registered share capital at the time of filing the tax refund application; operating in conditions-bound sectors without fulfilling the business conditions according to investment law or not maintaining sufficient business conditions during operation, except for investment projects in the investment stage, under the law not required to request the competent authority to issue a business license for conditions-bound sectors, or investment projects according to investment law and specialized law that are not required to have a business license for conditions-bound sectors;

+ Investment projects for resource and mineral extraction (excluding oil and gas exploration and development projects specified at point a of this clause) and investment projects for producing products from extracted resources and minerals processed into other products specified in clause 23, Article 5 of this Law.

[3] Business entities solely manufacturing goods or supplying services subject to a 5% value-added tax rate with uncredited input value-added tax from 300 million dong or more after 12 consecutive months or 4 consecutive quarters are entitled to a value-added tax refund; if business entities produce goods or provide services subject to various value-added tax rates, they are entitled to a refund based on the allocation rate determined by the Government of Vietnam.

[4] Business entities paying value-added tax by the credit method and dissolving or bankrupting with overpaid value-added tax or uncredited input value-added tax are entitled to a value-added tax refund.

In case of transforming from a collaborative group paying tax by the credit method to a cooperative, the cooperative inherits the overpaid value-added tax or uncredited input value-added tax of the collaborative group to credit or refund according to regulations.

[5] Foreigners and overseas Vietnamese holding passports or valid international travel documents are entitled to tax refunds for goods purchased in Vietnam for taking abroad upon exit.

The Government of Vietnam prescribes the dossier, procedures, refundable tax amount, and tax refund methods for the cases specified in this clause.

[6] value-added tax refunds for programs and projects using non-refundable official development assistance (ODA) or non-refundable aid, humanitarian aid is regulated as follows:

- The program owner, project, main contractor, or organization appointed by the foreign donor to manage the program or project using non-refundable ODA is refunded for the value-added tax paid for goods and services purchased in Vietnam for the program or project;

- Organizations in Vietnam using non-refundable aid funds, humanitarian aid from foreign organizations or individuals to purchase goods and services for non-refundable aid programs and projects, humanitarian aid in Vietnam are refunded for the value-added tax paid for these goods and services.

[7] Individuals entitled to diplomatic immunity rights under the law on diplomacy purchasing goods and services in Vietnam for use are refunded the value-added tax recorded on the value-added tax invoice or payment document with VAT-inclusive prices.

[8] Business entities with a value-added tax refund decision from competent authorities under the law and in cases of value-added tax refunds under an international treaty that the Socialist Republic of Vietnam is a party.

[9] Business entities eligible for tax refunds under the provisions of this Article must meet the following conditions:

- Business entities eligible for tax refunds prescribed in clauses 1, 2, 3, and 4 of this Article must be business entities paying value-added tax by the credit method, keeping and maintaining accounting books, accounting vouchers as prescribed by the accounting law; having a deposit account at a bank under the business entity’s tax code;

- Complying with regulations on input value-added tax credit according to the provisions of clause 2, Article 14 and not falling under the cases specified in clause 3, Article 14 of this Law;

- The seller has declared, paid the value-added tax according to the regulations for invoices issued to the business entity requesting a tax refund.

[10] Taxpayers eligible for value-added tax refunds with input value-added tax meeting all refund conditions specified in this Article and complying with tax declaration requirements according to the tax administration law, shall file a value-added tax refund dossier for each tax refund case and send it to the competent tax authorities.

The tax authority classifies value-added tax refund dossiers into those eligible for advance refunds or audits preceding refunds and resolves them according to tax administration laws.