Instructions for VAT refunds for investment projects for business establishments in Vietnam

Hello, Lawnet would like to answer as follows:

1. What is investment project?

Clause 4, Article 3 of the Law on Investment 2020 stipulates that investment project means a collection of proposals for the expenditure of mid-term or long-term capital to carry out investment activities in a particular administrative division over a certain period of time.

At the same time, Clauses 5, 6 and 7, Article 3 of the Law on Investment 2020 regulate the following types of investment projects:

- Expansion project means an investment project on development of a running project by expanding the scale, improving the capacity, applying new technologies, reducing pollution or improving the environment.

- New investment project means a project that is executed for the first time or a project independent from any other running project.

- Start-up project means an investment project that implements ideas on the basis of exploiting intellectual property, technologies and new business models and is able to grow quickly.

2. Conditions for business establishments with new investment projects to receive VAT refund in Vietnam

On October 12, 2023, the General Department of Taxation issued Official Dispatch 4525/TCT-CS on   response to JCCI's proposal regarding tax policies and administrative procedures, in which, the General Department of Taxation has responded about VAT refund as follows:

In Clause 3, Article 1 of the Law on VAT 2016, there is a regulation “1. ... Where a business establishment has registered to pay VAT using credit-invoice method has a new investment project which is still in its investment stage, VAT on goods/services purchased serving the investment has not been deducted, and the remaining tax is at least VND 300 million, VAT shall be refunded."

At the same time, according to Clause 3, Article 1 of Decree 49/2022/ND-CP, there are detailed regulations on VAT refund for investment projects as follows:

2. Business establishments eligible for tax refund regarding investment projects:

a) Business establishments that have registered for business and value-added tax payment according to the tax credit method (including newly established business establishments from investment projects), have new investment projects (including investment projects divided into several investment phases or investment categories) according to regulations of the Law on Investment in areas of the same or different provinces and cities where their headquarters are located (except for cases prescribed in Point c of this Clause, investment projects on construction of houses for sale, and investment projects that do not create fixed assets) that are in the investment phase or projects on prospection and projects to search, prospect, and develop oil and gas fields that are in the investment phase, and have the input value-added tax of goods and services incurred during the cumulative investment phase that have not been fully deducted from at least 300 million VND, shall be eligible for the value-added tax refund.

Business establishments that declare separate value-added tax for investment projects and have to compensate for the input value-added tax of investment projects with the value-added tax subject to payment of current business production activities (if any). After the compensation, if the cumulative input value-added tax of investment projects has not been deducted for at least 300 million VND, such business establishments shall be eligible for the value-added tax refund.

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b) Business establishments of conditional business lines shall be eligible for the value-added tax refund for investment projects as prescribed in Point a of this Clause if their investment projects fall into the following cases:

b.1) Investment projects in the investment stage and have been granted licenses to engage in conditional business lines by competent state agencies according to regulations of laws on investment and specialized laws under one of the following forms: Licenses, certificates, or documents on verification and approval.

b.2) Investment projects in the investment stage that are yet to be required to apply for licenses to engage in conditional business lines issued by competent state agencies according to regulations of laws on investment and specialized laws under one of the following forms: Licenses, certificates, or documents on verification and approval.

b.3) Investment projects that are not subject to licenses to engage in conditional business lines according to laws on investment and specialized laws under one of the following forms: Licenses, certificates, or documents on verification and approval.

Thus, business establishments (including newly established business establishments from investment projects) are entitled to VAT refund when:

First, production and business establishments register to pay VAT according to the tax credit method.

Second, the production and business establishment have a new investment project and are in the investment stage.

A new investment project can be divided into many investment phases or investment items according to the provisions of the Investment Law in the same province or city or in a different province or city where the head office is located. investment segment.

Third, the investment project must have a cumulative input value-added tax amount of 300 million VND or more on goods and services arising during the investment period that has not been fully deducted to be refunded the value-added tax. 

3. Documents for refund of VAT on an investment project in Vietnam

- According to Point a, Clause 2, Article 28 of Circular 80/2021/TT-BTC dated September 29, 2021 (amended in Article 2 of Circular 13/2023/TT-BTC dated February 28, 2023), documents for refund of VAT on an investment project include:

- Copy of the Certificate of Investment Registration or Investment Certificate or Investment License in case the Certificate of Investment Registration is mandatory;

- If the project has a construction work: Copy of the Land Use Right (LUR) Certificate, land allocation decision or land lease contract of a competent authority; the construction license;

- Copy of the charter capital contribution certificate;

- Regarding investment projects of business establishments having conditional business lines in the investment stage that have been granted licenses for conditional business lines by competent state agencies according to regulations of laws on investment and specialized laws under regulations in Clause 3 Article 1 of  Decree 49/2022/ND-CP: Copy of one of the licenses, certificates, or written confirmation or approval for these conditional business lines.

- A list of invoices and documentary evidence for purchases according to Form No. 01-1/HT in Appendix I hereof, unless the taxpayer has sent electronic invoices to the tax authority;

- The decision on establishment of the Project Management Board, the project owner's decision on assignment of project management tasks, regulations on organizational structure and operation of the branch or Project Management Board (if tax refund is applied by the branch or Project Management Board).

Thus, documents for VAT refund shall comply with the provisions in Point a, Clause 2, Article 28 of Circular 80/2021/TT-BTC dated September 29, 2021 (amended in Article 2 of Circular 13/2023/TT-BTC dated February 28, 2023)

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Key word: VAT | refund | VAT refund | investment project | in Vietnam |

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