Vietnam Value Added Tax
VAT Refund Service
For those exploring Vietnam, understanding value-added tax refunds is vital. Vietnam provides these refunds to exporters, foreign tourists, and Vietnamese citizens residing abroad. This guide simplifies the VAT refund process, outlining eligibility, steps, and necessary information for reclaiming VAT on eligible goods. Whether navigating markets or shopping, this guide aims to streamline the refund process, making your journey more rewarding. Continue reading to find out more about the VAT refund in Vietnam and the details that follow.
What does the VAT refund entail in Vietnam?
The VAT refund process involves requesting reimbursement from tax authorities for the VAT paid on goods and services used in business operations. This VAT amount was initially paid by the taxpayer on behalf of the purchaser.
VAT refund in Vietnam is a method used to calculate the tax amount payable to the national budget on taxable products. To put it simply, when a company purchases a product, it incurs VAT costs, termed input VAT. Subsequently, when the company sells the product to a customer, the buyer is responsible for paying the VAT calculated based on the product’s value, termed output VAT.
The VAT payment for the company is then calculated as follows: output VAT minus input VAT.
If the output VAT is more than the input VAT, the business has to pay the difference to the government. If the input VAT is more than the output VAT, the business can get a refund from the government.
Eligibility criteria for VAT refund in Vietnam
- Taxpayers using the tax deduction method are eligible for a refund if their input VAT hasn’t been fully deducted in the current period and can be carried forward.
- Taxpayers registered for VAT payment using the deduction method and involved in new investment projects with unclaimed input VAT exceeding 300 million VND during the initial investment phase qualify for a VAT refund.
- Taxpayers engaged in exporting goods or services with unclaimed input VAT exceeding 300 million Vietnamese Dong in a month or quarter are eligible for a monthly or quarterly VAT refund, excluding specific customs-related cases.
- Taxpayers utilizing the tax deduction method are eligible for a VAT refund during changes in ownership, company transformation, mergers, or dissolution, provided there’s an excess of paid VAT or unclaimed input VAT.
- Foreigners or Vietnamese citizens residing abroad can claim a VAT refund on goods purchased in Vietnam and taken upon departure.
- Programs funded by non-refundable official development assistance, aid, or humanitarian aid can request a VAT refund for goods and services procured in Vietnam. Similarly, organizations using aid funds for non-refundable programs in Vietnam qualify for a VAT refund on such goods and services.
- Entities with diplomatic privileges and immunities, as per relevant laws, are eligible for a VAT refund on goods and services purchased in Vietnam, documented with VAT invoices inclusive of VAT payment.
Requirements for a VAT refund in Vietnam
Companies, both local and FDI, seeking input VAT deduction for conditional business lines must ensure they possess VAT invoices for purchased goods and services, alongside bank remittances, and for exported goods and services, they additionally require contracts for sale and processing, with documents demonstrating payment through a bank, to apply for VAT refunds as subject to VAT, part of the VAT refund procedure in Vietnam, requiring supporting documents including tax refund declarations and VAT refund declaration form issued within 30 days and needing refunds in Vietnam, while the refund amount for VAT refunded goods, including investment projects, is subject to tax authorities’ inspection, which might require refund customs inspection and refund declarations issued, further necessitating boarding pass when leaving the country at the tax refund counter.
Applying for a VAT refund in Vietnam
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For tax refunds on exported goods and services:
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- Submitting a VAT refund application to the General Department of Taxation
- Providing a list of invoices and documents for purchased goods and services
- Submitting a list of cleared customs declarations
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For tax refunds associated with programs and projects funded by official development assistance (ODA) funds
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- Submitting a VAT refund application to the General Department of Taxation
- Providing a list of invoices and documents for purchased goods and services
- Decision of the competent authority on approval of projects using non-refundable ODA capital, projects using ODA capital
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For tax refunds pertaining to investment projects, the necessary documentation includes:
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- Submitting a VAT refund application to the General Department of Taxation
- Copies of the Investment Registration Certificate, Investment Certificate, or Investment License, if applicable
- Copies of documents verifying capital contributions
- A comprehensive list of invoices and vouchers for procured goods and services
- Construction permit and copy of certificate of land use right or papers of equivalent value (in case the project has construction works).
VAT refund in Vietnam regulations for FDI companies
For foreign direct investment (FDI) businesses, the VAT rate mirrors that of domestic businesses in Vietnam when focusing on the local market, as stipulated in the tax law. However, if a foreign investor establishes a business in Vietnam with the primary objective of exporting goods to foreign countries, particularly to the investing country, certain considerations are crucial:
- Determine if the business falls under the category of an EPE (Enterprise Processing Export).
- If categorized as an EPE, the company is exempt from VAT declaration. Consequently, VAT refund or deduction procedures are not required.
For detailed advice or further information on investing in Vietnam, please reach out to Premia TNC for dedicated support.
How can Premia TNC help?
Premia TNC, a distinguished service firm, boasts a team of adept professionals providing comprehensive corporate tax solutions in Vietnam. Our services encompass corporate income tax, Premia taxation services, personal income tax, and value-added tax, ensuring your business remains compliant with Vietnam’s tax regulations. We specialize in assisting businesses in fulfilling VAT declarations, guaranteeing accurate tax rates on products and services.
Partnering with us grants clients access to premium tax services delivered by seasoned professionals well-versed in the latest tax regulations in Vietnam. This allows business owners to focus on business growth while entrusting their tax management to capable hands.
FAQs
Various entities are eligible for VAT refunds, including companies involved in export activities, programs funded by official development assistance (ODA), investment projects, diplomatic entities, and certain individuals leaving the country.
Documents required for VAT refund applications usually include VAT invoices, evidence of bank remittances for purchases, and specific documentation for export-related VAT refunds, such as contracts and payment proof through a bank.
The duration of the VAT refund process varies but can often take several months. The timeline involves submitting the required documents, verification by tax authorities, and potential customs inspections, affecting the overall processing time.
Yes, eligibility for VAT refunds may be subject to thresholds. For instance, there are thresholds for unclaimed input VAT concerning investment projects or export activities, and certain conditions apply for ODA-funded programs.
Generally, goods or services purchased for business activities that involve export, investment, or ODA-funded programs, and specific cases determined by tax laws, can be eligible for VAT refunds in Vietnam.