From 14/04/2023: What are addition documents for the application for VAT refund on an investment project for conditional businesses in Vietnam?

From 14/04/2023: What are addition documents for the application for VAT refund on an investment project for conditional businesses in Vietnam?

Pursuant to Clause 1 and 2.a, Article 28 of the Circular 80/2021/TT-BTC (amended by Article 2 of the Circular 13/2023/TT-BTC effective from 14/04/2023) stipulating as follows:

Application for VAT refund

An application for VAT refund according to VAT laws (except refund of VAT under international treaties; refund of input VAT that remains after deduction upon transfer of ownership, conversion of enterprises, consolidation, merger, full division, partial division, bankruptcy and shutdown of enterprises specified in Article 30 and Article 31 of this Circular) shall contain:

1. The application form No. 01/HT in Appendix I hereof.

2. Documents that are relevant to the case. To be specific:

a) Refund of VAT on an investment project:

a.1) Copy of the Certificate of Investment Registration or Investment Certificate or Investment License in case the Certificate of Investment Registration is mandatory;

a.2) 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;

a.3) Copy of the charter capital contribution certificate;

a.4) 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 Government’s Decree No. 49/2022/ND-CP dated July 29, 2022: Copy of one of the licenses, certificates, or written confirmation or approval for these conditional business lines.

a.5) 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;

a.6) 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).

As regulations above, from 14/04/2023, addition documents for the application for VAT refund on an investment project for conditional businesses in Vietnam are copy of one of the licenses, certificates, or written confirmation or approval for these conditional business lines.

What are amendments on regulations on business establishments eligible for VAT refund regarding investment projects in Vietnam?

Pursuant to Clause 3 Article 1 of the Circular 13/2023/TT-BTC (effective from 14/04/2023) stipulating amendments on regulations on business establishments eligible for VAT refund regarding investment projects in Vietnam as follows:

Amendments to a number of Articles of Circular No. 219/2013/TT-BTC dated December 31, 2013 of the Ministry of Finance (amended by Circular No. 26/2015/TT-BTC dated February 27, 2015, Circular No. 130/2016/TT-BTC dated August 12, 2016 of the Ministry of Finance)

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3. Clauses 2 and 3 of Article 18 shall be replaced by the new Clause 2 below:

“2. Business establishments eligible for VAT refund regarding investment projects shall comply with regulations in Clause 3 Article 1 of Government’s Decree No. 49/2022/ND-CP dated July 29, 2022.”

As regulations above, business establishments eligible for VAT refund regarding investment projects shall comply with following regulations:

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.

In case investment projects of business establishments have been inspected and audited by competent state agencies, tax agencies may use the results of such inspection or audit to decide on the value-added tax refund.

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.

c) Business establishments that are ineligible for the value-added tax refund may be permitted to transfer the tax that has yet to be deducted from investment projects according to laws on investment to the next period in the following cases:

c.1) Investment projects that do not satisfy the business criteria according to the Law on Investment, regulations prescribed in Point a Clause 1 Article 13 of the Law on Value-Added Tax amended by the Law on Amendments to the Law on Value-Added Tax, the Law on Excise Tax, and the Law on Tax Administration of business establishments of conditional business lines that have not been granted licenses to engage in conditional business lines by competent state agencies by one of the following forms: Licenses, certificates, or documents on verification and approval or such business establishments have yet to satisfy the criteria for engaging in conditional business lines without the requirements for written verification or approval according to laws on investment (except for cases prescribed in Point b of this Clause).

Investment projects that do not satisfy the business criteria during their operation according to regulations prescribed in Point a Clause 1 Article 13 of the Law on Value-Added Tax amended by the Law on Amendments to the Law on Value-Added Tax, the Law on Excise Tax, and the Law on Tax Administration of business establishments of conditional business lines that have one of their licenses to engage in conditional business lines revoked during operation such as licenses, certificates, or documents on verification and approval; or during their operation, if such business establishments fail to satisfy the criteria for investment in conditional business lines according to laws on investment, the time of non-refundable value-added tax shall be from the time such business establishments have one of the mentioned documents revoked or the time when competent state agencies inspect and detect such business establishments fail to satisfy the criteria for investment in conditional business lines.

c.2) Investment projects on the utilization of natural resources and minerals licensed from July 1, 2016 or investment projects on the production of goods and products with the total value of natural resources and minerals plus energy costs account for 51% of the finished product price according to the investment project, except for projects to search and prospect oil and gas fields as prescribed in Point a of this Clause.

What are regulations on handlling the value-added tax amount that has been withdrawn and refunded by business establishments subject to value-added tax adjustment in Vietnam?

Pursuant to Article 3 of the Circular 13/2023/TT-BTC (effective from 14/04/2023) stipulating handlling the value-added tax amount that has been withdrawn and refunded by business establishments subject to value-added tax adjustment in Vietnam as follows:

+) If a tax agency has issued decision to reclaim VAT refunds, impose late payment interest and fines for administrative tax offences, such tax agency shall issue a decision on adjustment according to Form No. 38 attached to Government’s Decree No. 118/2021/ND-CP dated December 23, 2021.  If the business establishment has additionally declared the reclaimed VAT refund, such business establishment and tax agency shall adjust the reclaimed VAT refund and late payment interest according to Form No. 02/KTT attached to Circular No. 80/2021/TT-BTC dated September, 29 2021 of the Ministry of Finance to.

+) The reclaimed VAT refund whether the business establishment has offset the reclaimed VAT refund against VAT payable on business operation activities, late payment interest and fines for administrative violations of tax (if any) paid for state budget before the effective date of this Circular shall be adjusted according to regulations in Article 25 and Section 2, Chapter V of Circular No. 80/2021/TT-BTC dated September 29, 2021 of the Ministry of Finance.  If over-reclaimed VAT refund is returned, it shall be taken from the VAT refund budget.

The difficulties that arise during the implementation must be reported to the Ministry of Finance for research and consideration.

Best regards!