Vietnam: What are the guidelines on VAT refund policy for projects financed by grant ODA in 2022?
What are the goods and services that are not subject to VAT in Vietnam?
Pursuant to Point e, Clause 19, Article 4 of Circular 219/2013/TT-BTC, on subjects not subject to VAT:
Goods and services that are not subject to VAT
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19. Imported goods, goods/services sold to other organizations and individuals as humanitarian aid or non-refundable aid in the following cases:
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e) Goods and the goods/services sold to other organizations and individuals as humanitarian aid or non-refundable aid for Vietnam.
In order to be exempt from VAT, the international organization and or foreigner that buys goods/services in Vietnam as humanitarian aid and non-refundable aid must send a note to the seller, which specifies their name, the quantity or value of purchased goods, and bears certification of the aid by the Ministry of Finance and Services of Finance.
When selling goods, the seller must issue an invoice specifying that the goods are sold at VAT-exclusive prices to a foreign entity as non-refundable aid or humanitarian aid, keep the aforesaid note as an evidence when declaring tax. Any foreign entity or international organization that purchases goods/services in Vietnam as non-refundable aid or humanitarian aid at VAT-inclusive prices may claim a refund according to Clause 6 Article 18 of this Circular.
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Thus, the basis for determining goods and services that are not subject to VAT shall comply with the above provisions.
Vietnam: What are the guidelines on VAT refund policy for projects financed by grant ODA in 2022?
What are the regulations on VAT refund for projects financed by grant ODA for Vietnam?
According to the provisions of Clause 3, Article 1 of Circular 130/2016/TT-BTC, on the subjects of tax refund:
...Projects and programs financed by grant ODA, grant aids or humanitarian aids shall be eligible for VAT refund.
a) For the projects financed by grant ODA: Project owners or main contractors or organizations that foreign sponsors designate to manage the projects shall receive a refund of VAT paid on goods and services acquired in Vietnam to serve the projects.
b) VAT paid on goods and services shall be refunded to Vietnam-based organizations spending foreign entities’ humanitarian aids on such goods and services for projects and programs that utilize grant aids and humanitarian aids.
... VAT paid on the projects and programs financed by grant ODA shall be refunded in accordance with the guidelines of the Ministry of Finance.
Thus, for the projects financed by grant ODA: Project owners or main contractors or organizations that foreign sponsors designate to manage the projects shall receive a refund of VAT paid on goods and services acquired in Vietnam to serve the projects.
What are the guidelines on VAT refund policy for projects financed by grant ODA for Vietnam?
According to the guidance in Official Letter 38604/CTHN-TTHT Hanoi in 2022 on VAT refund policy for projects using non-refundable aid funds, as follows:
- In case of imported goods, goods/services sold to other organizations and individuals as humanitarian aid or non-refundable aid for Vietnam, imported goods, goods/services sold to other organizations and individuals as humanitarian aid or non-refundable aid for Vietnam are not subject to VAT under the guidance at Point c, Clause 19, Article 4 of Circular 219/2013/TT-BTC of the Ministry of Finance. In case of projects and programs financed by grant ODA, grant aids or humanitarian aids, they are eligible for VAT refund under the guidance in Clause 6, Article 18 of Circular 219/2013/TT-BTC (amended and supplemented in Clause 3, Article 1 of Circular 130/2016/TT-BTC of the Ministry of Finance).
- For the projects financed by grant ODA: Project owners or main contractors or organizations that foreign sponsors designate to manage the projects shall receive a refund of VAT paid on goods and services acquired in Vietnam to serve the projects under the guidance in Clause 6, Article 18 of Circular 219/2013/TT-BTC (amended and supplemented in Clause 3, Article 1 of Circular 130/2016/TT-BTC dated August 12, 2016 of the Ministry of Finance).
- VAT paid on goods and services shall be refunded to Vietnam-based organizations spending foreign entities’ humanitarian aids on such goods and services excludes projects and programs that utilize grant aids and humanitarian aids, the paid VAT on such goods or services is not eligible for VAT refund specified in Clause 6, Article 18 of Circular 219/2013/TT-BTC (amended and supplemented in Clause 3, Article 1 of Circular 130/2016/TT-BTC dated August 12, 2016 of the Ministry of Finance).
Thus, the above guidance on VAT refund policy for projects using ODA that you can refer to.
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