Vietnam: What are cases in which VAT refund for investment projects is not allowed from July 1, 2025?

Vietnam: What are cases in which VAT refund for investment projects is not allowed from July 1, 2025?

Based on point b, clause 2, Article 15 of the Law on Value-Added Tax 2024 (effective from July 1, 2025), regulations on VAT refund are as follows:

VAT Refund

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2. VAT refund for investments is regulated as follows:

a) Enterprises that have registered to pay VAT by the credit method and have investment projects (new investment projects, expansion investment projects) as per the investment law (including investment projects divided into multiple investment phases or multiple investment items, excluding investment projects not forming fixed assets of the enterprise) that are in the investment phase or projects for exploration, development of oil and gas fields in the investment phase and have VAT input arising during the investment phase that has not yet been refunded, the enterprise shall offset this with the VAT payable for ongoing production, business activities (if any). If after offsetting, the VAT input of the investment project that has not been offset is from 300 million VND or more, a VAT refund will be granted.

In case the investment project has been completed (including investment projects divided into multiple phases, investment items with completed phases, completed investment items) but the enterprise has not yet completed the VAT refund arising during the investment period (completed investment items, completed phase) the enterprise must submit the VAT refund application within 1 year from the completion date of the investment project or the completion date of the investment phase, investment item.

The completion date of the investment project or the completion date of the investment phase, investment item is the date when revenue of the investment project occurs or the date when revenue of the investment phase, investment item occurs. Revenue stipulated in this clause does not include revenue arising during trial operation, financial activity revenue, liquidation of project materials;

b) The business is not entitled to a VAT refund but can carry forward the uncredited VAT amount of the investment project according to investment law to the next period in the following cases:

b1) The business's investment project does not contribute sufficient charter capital as registered at the time of submitting the tax refund application; conducting conditional business sectors, trades without meeting the investment business conditions according to the law on investment or fails to ensure maintenance of sufficient business conditions during the operation, except for investment projects in the investment phase, according to investment law, specialized law does not require requesting an authoritative state agency to issue a business license for conditional business sectors, investment projects under the law on investment, specialized law do not require a business license for conditional business sectors;

b2) Investment projects for exploiting natural resources, minerals (excluding projects for exploration, drilling, development of oil and gas fields mentioned in point a of this clause) and investment projects for producing products which are exploited natural resources, minerals processed into other products as stipulated in clause 23 Article 5 of this Law.

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Therefore, based on the above regulations, from July 1, 2025, businesses are not allowed to receive a VAT refund for investment projects but can only carry forward the uncredited VAT amount of the investment project to the next period in the following cases:

- Investment projects do not contribute sufficient charter capital as registered at the time of submitting the tax refund application; conducting conditional business sectors without meeting the business conditions under the investment law or failing to ensure maintenance of sufficient business conditions during operation, except for investment projects in the investment phase, according to investment law, specialized law do not require requesting an authoritative state agency to issue a license for conditional business sectors, investment projects under investment law, specialized law do not require a business license for conditional business sectors.

- Investment projects for extracting natural resources, minerals (excluding exploration, drilling, development of oil and gas fields as stipulated in point a, clause 2, Article 15 of the Law on Value-Added Tax 2024) and investment projects that produce products which are exploited natural resources, minerals processed into other products.

What are regulations on credit-invoice method in Vietnam from July 1, 2025?

Pursuant to Article 11 of the Law on Value-Added Tax 2024, the following is stated:

- The payable VAT calculated by the credit method is the output VAT minus the deductible input VAT;

- Output VAT is the total VAT of goods, services sold as recorded on the VAT invoice.

The VAT of goods and services sold as recorded on the VAT invoice equals the tax base price of the taxable goods and services sold multiplied by the VAT rate of those goods and services.

In cases of using invoices showing the payment price as the price inclusive of VAT, output VAT is determined by subtracting the tax base price from the payment price as specified in point k, clause 1, Article 7 of the Law on Value-Added Tax 2024.

- Deductible input VAT is the total VAT recorded on the VAT invoice of purchased goods and services, tax payment vouchers for imports, or tax payment vouchers for services defined at clauses 3 and 4, Article 4 of the Law on Value-Added Tax 2024, meeting the conditions specified in Article 14 of the Law on Value-Added Tax 2024.

What are prohibited acts in VAT deduction and refund in Vietnam from July 1, 2025?

According to Article 13 of the Law on Value-Added Tax 2024, the following acts are prohibited in deduction and refund of VAT:

- Buying, giving, selling, advertising, brokering the purchase and sale of invoices.

- Engaging in transactions of buying, selling goods, providing services that do not actually exist or are non-conforming to the law.

- Issuing invoices for goods sold, services provided during the temporary cessation of business activities, except for issuing invoices to clients to fulfill contracts signed before the notice of business suspension.

- Using illegal invoices, vouchers, or illegally using invoices, vouchers as per the regulations from the Government of Vietnam.

- Failing to transmit electronic invoice data to the tax authority as prescribed.

- Tampering with, misusing, unauthorized access, destroying the information system of invoices, vouchers.

- Offering, receiving, mediating bribes, or engaging in other acts involving invoices, vouchers to claim VAT deduction, refund, misappropriate taxes, evade VAT.

- Collusion, concealment; collusion between tax management officials, tax authorities, and businesses, importers, between businesses, importers in the use of illegal invoices, vouchers, illegal use of invoices, vouchers to claim VAT deduction, refund, misappropriate taxes, evade VAT.

*Note: The Law on Value-Added Tax 2024 takes effect from July 1, 2025, except for the following:

Provisions regarding the revenue threshold of households, individuals in production and business subject to non-taxable status in clause 25, Article 5 of the Law on Value-Added Tax 2024 and Article 17 of the Law on Value-Added Tax 2024 are effective from January 1, 2026.