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

What is VAT refund in Vietnam?

Currently, the law does not have specific regulations defining what VAT refund is. However, it can be understood as follows:

VAT refund is when the state budget returns to businesses, organizations, enterprises, or individuals the amount of tax that has been paid for goods and services. The refunded amount is the input tax when purchasing goods and services that the business has not been able to deduct in the tax period or that entity or individual is not subject to taxation.

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

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

According to Clause 2, Article 15 of the Law on Value-Added Tax 2024 (effective from July 1, 2025), the cases of Refund of VAT on investments from July 1, 2025, are stipulated as follows:

- Business establishments that have registered to pay value-added tax by the credit method have investment projects (new investment projects, expansion investment projects) in accordance with the investment law (including investment projects divided into multiple phases or multiple items, except for investment projects not forming fixed assets of the enterprise) that are still in the investment stage or oil and gas exploration and development projects that are still in the investment stage, and have incurred VAT input arising during the investment period that has not been refunded, the business establishment shall offset this with the VAT payable for ongoing production and business activities (if any). If after offsetting, the VAT input of the investment project that has not been completely deducted remains at 300 million VND or more, a VAT refund will be made.

In the case where the investment project has been completed (including investment projects divided into multiple phases with certain investment phases or items completed) but the business has not applied for a VAT refund incurred during the investment phase (completed items or phases), the business must submit a VAT refund application within 01 year from the investment project completion date or the date of phase, item completion.

The date of the investment project or the phase, item completion is the revenue date of the investment project or the revenue date of the phase, item. Revenue in this context does not include revenue generated during the trial operation phase, financial activity revenue, or liquidation of raw materials of the investment project.

- A business establishment is not eligible for VAT refund but can transfer the undeducted tax of the investment project to the next period as specified by the investment law in the following cases:

+ The business investment project has not contributed the registered charter capital at the time of VAT refund application; is operating in a conditionally licensed business without meeting the conditions as prescribed in the investment law or fails to maintain the necessary conditions during its operation, except for investment projects in the investment phase which, according to the investment and sector-specific laws, do not require a business license for conditional business lines or do not require such a license according to the relevant regulations.

+ Investment projects involving resource exploitation exclude oil and gas exploration, and development projects specified at point a of this clause, and investment projects producing products that involve processed resources and minerals into other products as defined in Clause 23, Article 5 of the Law on Value-Added Tax 2024.

Which entities are taxpayers according to the Law on Value-Added Tax 2024?

According to Article 4 of the Law on Value-Added Tax 2024, taxpayers are defined as follows:

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

(2) Organizations and individuals importing goods subject to VAT (hereinafter referred to as importers).

(3) Organizations and individuals producing or trading within Vietnam that purchase services (including purchases of services attached to goods) from foreign organizations without a permanent establishment in Vietnam, and non-resident foreign individuals, except as specified in Clauses 4 and 5, Article 4 of the Law on Value-Added Tax 2024; organizations producing or conducting business in Vietnam that purchase goods or services to explore, develop, and exploit oil and gas from foreign organizations without a permanent establishment in Vietnam or non-resident foreign individuals.

(4) Foreign suppliers without a permanent establishment in Vietnam who engage in e-commerce or digital platform-based business with organizations or individuals in Vietnam (hereinafter referred to as foreign suppliers); organizations that are foreign digital platform managers and perform withholding, and submit tax on behalf of foreign suppliers; business organizations in Vietnam that apply VAT calculation by the credit method that purchase services from foreign suppliers without a permanent establishment in Vietnam through electronic commerce or digital platforms should perform withholding, and tax submission on behalf of foreign suppliers.

(5) Organizations that are the managers of e-commerce marketplaces or digital platform payment functions who perform withholding, substitute tax submission, and tax declaration for business households and individuals trading on the e-commerce marketplace or digital platforms.

(6) The Government of Vietnam stipulates the detailed provisions of Clauses 1, 4, and 5 of Article 4 of the Law on Value-Added Tax 2024; regulations regarding taxpayers in the case where foreign suppliers provide services to purchasers who are business organizations in Vietnam applying the credit method as specified in Clause 4, Article 4 of the Law on Value-Added Tax 2024.

*Note: The Law on Value-Added Tax 2024 comes into effect from July 1, 2025, except for provisions regarding revenue levels of households and individuals producing or trading goods and services not subject to tax specified in Clause 25, Article 5 of the Law on Value-Added Tax 2024 and Article 17 of the Law on Value-Added Tax 2024 that takes effect from January 1, 2026.