Vietnam: What are the principles for deduction and refund of tax in exported goods and services at Tax Departments?
What are the cases in which tax on exported goods and services is refunded in Vietnam?
According to the provisions of Clause 4, Article 18 of Circular No. 219/2013/TT-BTC (amended by Article 2 of Circular 25/2018/TT-BTC), cases of refund of VAT on exported goods and services include:
- In a month (in case of monthly declaration) or quarter (in case of quarterly declaration), if the input VAT on exported goods/services (including goods that are imported and subsequently exported to free trade zones and the goods that are imported and subsequently exported to other countries) of a business establishment remains at least 300 million dongs after being offset against, it shall be refunded by month or quarter. If such input VAT is less than 300 million dongs, it shall be offset against in the next month/quarter.
- Certain cases of eligibility for tax refund upon export:
+ The business establishment that has goods exported through entrustment;
+ The business establishment that processes exports for foreign principals on a contract basis;
+ The business establishment that has goods and materials exported for overseas construction works;
+ The business establishment whose exports are delivered to other domestic entities as requested by the importers.
- VAT will not be refunded if the goods are imported and then exported outside a customs-controlled area in accordance with regulations of law on customs or the goods are exported outside the customs control area in accordance with regulations of law on customs.
- The tax authority shall grant a refund before inspection if the business establishment as a manufacturer of exports has not incurred any penalty for smuggling, illegal cross-border transport of goods, tax evasion, tax fraud, or trade fraud for two consecutive years or the business establishment does not pose a high risk according to the Law on Tax Administration and its instructional documents.
What are the conditions and procedures for refund of tax on exported goods and services in Vietnam?
The conditions and procedures for refund of tax on exported goods and services in Vietnam are specified in Clause 1, Article 19 of Circular 219/2013/TT-BTC as follows:
- To be eligible for tax refund according to Points 1, 2, 3, 4, 5 Article 18 of Circular 219/2013/TT-BTC, the business establishment must:
+ Pay tax using the credit-invoice method, be issued with a Certificate of Business registration or investment license or practice certificate, or a decision on establishment issued by a competent authority, have a legal seal, keep accounting records in accordance with accounting laws, and have deposit accounts at banks according to the business establishment’s TIN;
+ Have deposit accounts at banks according to the business establishment’s TIN.
- Input VAT that has been claimed on the VAT declaration must not be aggregated with the deductible tax of the next month.
- AT shall be refunded in accordance with the procedures in the Law on Tax Administration and its guiding documents.
What are the principles for deduction and refund of tax in exported goods and services in Vietnam?
According to the provisions of Article 16 of Circular 219/2013/TT-BTC (amended by Clause 11, Article 1 of Circular 26/2015/TT-BTC and Clause 7, Article 3 of Circular 119/2014/TT-BTC) as follows:
Article 16. Conditions for deducting and refunding input VAT on exported goods and services
VAT on exported goods and services (except for the cases in Article 17 of this Circular) shall only be deducted and refunded when the documents mentioned in Clause 2 Article 9 and Clause 1 Article 15 of this Circular are presented. In particular:
1. The contract to sell, process goods, or provide services for a foreign entity. If the exported is entrusted, the compulsory documents are the entrustment contract and the note of entrustment contract finalization or a debt comparison note between the entrusting party and the entrusted party, specifying the quantity, categories, value of exported goods, the export contract number; the date and amount of money on the bank transfer receipt for the payment between the foreign party and the entrusted party, the date and amount of money on the receipt for payment to the entrusting party by the entrusted party, number and date of the customs declaration of exported goods made by the entrusted party.
2. If customs procedure has been completed in accordance with instructions of the Ministry of Finance: the customs declaration.
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The deduction and refund of tax on exported goods and services in Vietnam must ensure the principles and conditions as prescribed above.
At the same time, in response to the General Department of Taxation of Vietnam in Official Dispatch 1040/TCT-KK in 2023 here, the Tax Department shall classify and process tax refund applications for business establishments. In case, under the inspection results, the business establishment satisfies the legal provisions on tax administration, and the law on value-added tax and ensures the conditions for tax declaration, deduction, and refund, the Tax Department shall settle the tax refund according to regulations.
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