What are regulations on refund of VAT on investments in Vietnam from July 1, 2025?

What are regulations on refund of VAT on investments in Vietnam from July 1, 2025?

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

- Business establishments that have registered for VAT payment by the tax deduction method, with investment projects (new investment projects, expanded investment projects) as stipulated under the law on investment (including investment projects divided into multiple investment phases or multiple investment items, except for investment projects that do not form fixed assets of the enterprise) during the investment phase, or projects for oil and gas exploration, development, which are in the investment phase, where the input VAT incurred during the investment phase has not been refunded, the business establishment shall offset it with the VAT payable for the ongoing production and business activities (if any). After offsetting, if the uncredited input VAT of the investment project is 300 million VND or more, a VAT refund shall be granted.

+ In case the investment project has been completed (including investment projects divided into multiple phases, investment items where phases or items have been completed) but the business establishment has not conducted the VAT refund for VAT incurred during the investment phase (completed investment item, investment phase), the business establishment is required to submit a VAT refund application according to regulations within 1 year from the date the investment project or the investment phase, investment item is completed.

+ The date an investment project or an investment phase, investment item is completed is the date on which revenue of the investment project or the revenue of the investment phase, investment item is generated. The revenue referred to in this clause does not include revenue incurred during the trial run phase, financial operating revenue, liquidation of materials from the investment project;

- Business establishments are not entitled to a VAT refund but can carry over the uncredited VAT of the investment project according to the provisions of the investment law to the next period under the following circumstances:

- The investment project of the business establishment does not contribute the full charter capital as registered at the time of submitting the tax refund dossier; conducts business in industries or trades with conditional business investment without meeting all business conditions as stipulated by the investment law or fails to maintain sufficient business conditions during operation, except for investment projects in the investment phase, in accordance with investment law and specialized legal provisions, where there is no requirement for requesting the competent state agency to issue a business license for conditional business investment industries or projects according to investment law and specialized laws without the obligation to have a business license for conditional investment industries;

- Investment projects involved in the exploitation of natural resources, minerals (excluding the oil and gas exploration, development, as stated in Point A, Clause 2, Article 15 of the Law on Value-Added Tax 2024) and investment projects to produce products from exploited natural resources, minerals that have been processed into other products as stipulated in Clause 23, Article 5 of the Law on Value-Added Tax 2024.

What are regulations on refund of VAT on investments in Vietnam from July 1, 2025? (Image from Internet)

What is the time for determination of VAT in Vietnam according to the Law on Value-Added Tax 2024?

According to Article 8 of the Law on Value-Added Tax 2024 (effective from July 1, 2025), the specific timing for determining VAT is as follows:

[1] The timing for determining VAT is regulated as follows:

- For goods, it is the time when ownership or use rights of the goods are transferred to the buyer or the invoice issuance time, regardless of whether payment has been received or not;

- For services, it is the completion time of the service provision or the invoice issuance time, regardless of whether payment has been received or not.

[2] The timing for determining VAT for the following goods and services is governed by the Government of Vietnam:

- Exported goods, imported goods;

- Telecommunication services;

- Insurance business services;

- Power supply activities, electricity production activities, clean water activities;

- Real estate business activities;

- Construction, installation activities, and oil and gas activities.

Which entities are to VAT payers in Vietnam?

According to Article 4 of the Law on Value-Added Tax 2024 (effective from July 1, 2025), the persons liable to pay VAT are specifically defined as follows:

- Organizations, households, individuals producing and trading goods, and services subject to VAT (hereinafter referred to as business establishments).

- Organizations, individuals importing goods subject to VAT (hereinafter referred to as importers).

- Organizations, individuals conducting production, business in Vietnam purchasing services (including cases of purchasing services associated with goods) from foreign organizations without a permanent establishment in Vietnam, individuals overseas who are non-resident entities in Vietnam, except as stipulated in Clause 4 and Clause 5, Article 4 of the Law on Value-Added Tax 2024; organizations conducting production, business in Vietnam purchasing goods, services to carry out oil and gas exploration, development activities from foreign organizations without a permanent establishment in Vietnam, individuals overseas who are non-resident entities in Vietnam.

- Foreign suppliers without a permanent establishment in Vietnam conducting e-commerce business, platform-based business with organizations, individuals in Vietnam (hereinafter referred to as foreign suppliers); organizations that are management platforms from abroad to deduct, pay on behalf of the tax liability of the foreign suppliers; business organizations in Vietnam applying the VAT calculation method as the deduction method to purchase services from foreign suppliers without a permanent establishment in Vietnam through e-commerce channels or digital platforms performing deduction, paying on behalf of the tax liability of foreign suppliers.

- Organizations acting as managers of e-commerce trading platforms, platform managers with payment functions, implementing deduction, paying VAT on behalf, and declaring deducted tax amounts for business households and individuals on e-commerce platforms, digital platforms.