What are regulations on authority to decide investment for projects using non-refundable ODA aids in Vietnam from January 1, 2025?

What are regulations on authority to decide investment for projects using non-refundable ODA aids in Vietnam from January 1, 2025?

Pursuant to Clause 3, Article 38 of the Law on Public Investment 2024 (effective from January 1, 2025), which stipulates the authority to decide on investment programs and projects as follows:

Authority to Decide on Investment Programs and Projects

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3. The Chairman of the Provincial People's Committee decides on the following investment programs and projects:

a) Public investment programs, Group A projects that have been approved for investment policy by the Provincial People's Council;

b) Group B and Group C projects managed by the province;

c) Group B and Group C projects using ODA loans, preferential foreign loans; projects using non-refundable ODA aids.

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Thus, the authority to decide on the investment in a project using non-refundable ODA aids belongs to the Chairman of the Provincial People's Committee.

What are regulations on authority to decide investment for projects using non-refundable ODA aids in Vietnam from January 1, 2025? (Image from the Internet)

Are projects using non-refundable ODA aids with part of domestic sapital eligible for VAT refund in Vietnam?

According to Article 13 of Circular 181/2013/TT-BTC, regulating VAT refunds for ODA grant projects with part of domestic capital as follows:

VAT Refund for Non-Refundable ODA Grant Projects with Part of Domestic Capital

In cases where a non-refundable ODA grant project has a capital structure that partly comprises non-refundable ODA grant funds, and partly matching funds from the State budget, or contributions from the people (this portion is specified to carry out part of the project but is not meant for VAT purposes), the project owner or main contractor is eligible for a VAT refund for goods and services purchased using non-refundable ODA grant funds for the project as stipulated in Clause 2, Article 5, and Clause 2, Article 6 of this Circular. VAT will not be refunded for goods and services purchased using matching funds from the State budget and people's contributions. The project owner must separately account for the VAT on goods and services purchased with non-refundable ODA grant funds; if unable to account separately, the project owner is not eligible for a VAT refund, and the main contractor will receive offset and input VAT refunds as stipulated in Clause 2, Article 6 of the Circular.

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Thus, for projects using non-refundable ODA aids with part of domestic capital, the project owner or main contractor is entitled to a VAT refund for goods and services purchased with non-refundable ODA grant funds for the project, but not for goods and services purchased with matching funds from the State budget.

Are individuals working for projects using non-refundable ODA aids eligible for tax incentives in Vietnam?

Based on Clause 1, Article 7 of Circular 181/2013/TT-BTC, which regulates tax policies for individuals working on projects using non-refundable ODA aids as follows:

Tax Policies for Individuals Working on the Project

1. Vietnamese and foreign individuals working for ODA projects and ODA project management boards are required to declare and pay personal income tax (PIT) according to the provisions of the law on PIT and tax administration.

2. In cases where an individual is a foreigner certified as an expert by the project management body to carry out ODA programs and projects eligible for tax and fee incentives according to the Regulations on Foreign Experts carrying out ODA programs and projects issued with Decision No. 119/2009/QD-TTg dated October 1, 2009, by the Prime Minister of the Government of Vietnam, they are exempted from import tax, VAT, special consumption tax (if any), registration fees, and personal income tax.

Thus, Vietnamese and foreign individuals working on projects using non-refundable ODA aids will not enjoy personal income tax incentives and must declare and pay personal income tax according to the provisions of the law on PIT and tax management.

Except for foreign individuals certified by the project management body as experts implementing projects using non-refundable ODA aids, eligible for tax and fee incentives according to the Regulations on Foreign Experts implementing ODA programs and projects issued with Decision 119/2009/QD-TTg, they are exempt from import tax, VAT, special consumption tax (if any), registration fees, and personal income tax.