Vietnam VAT Refunds: Expanded Eligibility and Stricter Compliance Requirements

Vietnam’s revised value-added tax framework expands refund opportunities for qualifying investment projects, exporters and businesses supplying goods and services subject to the 5% VAT rate. However, access to these refunds increasingly depends on the quality and consistency of a company’s invoices, payment records, accounting data, and electronic tax filings.

The revised VAT Law, effective from 1 July 2025, introduced significant changes to refund eligibility. This was followed by new tax administration procedures effective from 1 July 2026, including updated application forms, more standardized processing and a stronger risk-based approach to reviewing refund claims.

For foreign-invested enterprises, manufacturers, and exporters in Vietnam, these developments may improve access to working capital. At the same time, incomplete documentation or inconsistencies between accounting and tax records may result in inspections, delays, or rejected claims.

Understanding Vietnam’s Revised VAT Refund Framework

A VAT refund allows an eligible business to recover input VAT that cannot be fully offset against its output VAT. This commonly arises during the investment stage, in export-oriented operations, or when a business consistently incurs input VAT at a higher rate than the VAT applied to its outputs.

Vietnam’s revised framework broadens refund eligibility in several important areas. It also removes certain cases that previously qualified and strengthens the conditions businesses must satisfy before a refund can be approved.

The reforms place greater emphasis on electronic tax data and taxpayer risk profiles. As a result, preparing a technically eligible claim is no longer sufficient on its own. The underlying invoices, contracts, payments, declarations, customs documents and accounting records must also be complete and consistent.

Which Businesses May Qualify for a VAT Refund?

Businesses applying the VAT credit method may be eligible for a refund under several circumstances.

New Investment Projects

A qualifying new investment project may apply for a VAT refund during its pre-operational investment stage when its accumulated creditable input VAT reaches at least VND 300 million.

The project must satisfy the applicable investment, accounting, tax and documentation requirements. Businesses should also ensure that expenses relating to the investment project are recorded and declared separately from those associated with existing operations.

Business Expansion Projects

The revised VAT Law extends refund eligibility to qualifying business expansion investments during the investment stage.

A business may apply when the accumulated creditable input VAT associated with the expansion reaches VND 300 million or more. This is an important development for companies increasing production capacity, adding new facilities or investing in additional business activities.

To support the claim, expenses related to the expansion should be clearly identified and separated from the company’s existing operations.

Exporting Businesses

Businesses exporting goods or services may qualify for a VAT refund when their accumulated deductible input VAT reaches at least VND 300 million, subject to the relevant conditions and refund limits.

Exporters generally need to maintain a complete audit trail covering:

• Commercial contracts;
• Valid VAT invoices;
• Customs declarations;
• Evidence that the goods were exported;
• Bank payment documents; and
• Accounting and tax records supporting the relevant transactions.

Import VAT incurred on goods that are subsequently exported in the same condition is no longer refundable under the export VAT refund mechanism.

Businesses Applying the 5% VAT Rate

Businesses that exclusively supply goods and services subject to the 5% VAT rate may apply for a refund when their uncredited input VAT reaches VND 300 million or more after 12 consecutive months or four consecutive quarters.

Where a business supplies goods or services subject to multiple VAT rates, the refundable amount must be determined using the prescribed revenue allocation method.

Dissolution and Closure

Certain businesses applying the VAT credit method may qualify for a refund upon dissolution if they have overpaid VAT or retain eligible input VAT that has not been fully credited.

Eligibility depends on the circumstances of the closure and whether the business has fulfilled its outstanding tax and administrative obligations.

ODA and Humanitarian Aid Projects

Eligible official development assistance projects and humanitarian aid programs receiving non-refundable aid may obtain VAT refunds for qualifying goods and services purchased in Vietnam.

These claims must be supported by the required project approvals and documentation demonstrating that the expenses relate directly to the eligible program.

VAT Refund Cases That Have Been Removed

The revised VAT framework no longer permits refunds solely on the basis of certain corporate restructuring activities.

These include:

• Changes in company ownership;
• Changes in enterprise type;
• Mergers;
• Consolidations;
• Divisions; and
• Separations or demergers.

Businesses undergoing restructuring should therefore assess how any remaining input VAT will be treated before completing the transaction. The inability to obtain a refund may affect the structure, timing, and cash-flow implications of the reorganization.

Key Conditions for Securing a VAT Refund

A business must generally satisfy the following requirements to qualify for a VAT refund:

• Apply VAT using the credit method;
• Maintain accounting books and supporting records in accordance with Vietnamese accounting regulations;
• Hold a bank account registered under its tax identification number;
• Meet the applicable input VAT deduction requirements; and
• Maintain valid invoices, contracts, payment records and supporting transaction documents.

The tax authorities may compare information across electronic invoices, tax declarations, accounting records, customs data, registered bank accounts and third-party information. Any unexplained differences may increase the likelihood of additional review.

Non-Cash Payment Requirements

Non-cash payment documentation is particularly important for VAT deduction and refund purposes.

For goods or services purchased on deferred payment or instalment terms with a value of VND 5 million or more, businesses must retain evidence of non-cash payment by the contractual due date.

If the required payment documentation is unavailable when payment becomes due, the corresponding input VAT must generally be adjusted in the relevant tax period. The input VAT may subsequently be reclaimed when valid non-cash payment evidence becomes available, subject to the applicable conditions.

Businesses should ensure that payment terms stated in contracts, contract appendices, invoices, bank records, and accounting entries remain aligned.

How the New VAT Refund Process Works

Decree No. 252/2026/ND-CP and Circular No. 89/2026/TT-BTC, effective from 1 July 2026, introduced updated procedures and application forms for VAT refunds.

The new process relies more heavily on electronic information already available within the tax administration system.

Submission and Initial Review

After receiving an application, the tax authority must generally notify the taxpayer within three working days whether the VAT refund dossier has been accepted.

A complete and internally consistent submission can help reduce follow-up requests. However, acceptance of the dossier does not guarantee that the refund will ultimately be approved.

Refund First, Audit Later

For lower-risk claims classified under the refund-first, audit-later mechanism, the tax authority generally issues its refund decision or relevant notification within six working days from the date the application is accepted.

The claim may still be examined after the refund has been issued. Businesses should therefore retain the complete supporting file and remain prepared to explain the transactions included in the application.

Audit First, Refund Later

Higher-risk claims may be subject to inspection before the refund is approved.

After the tax authority issues its inspection conclusion or a decision addressing any identified violation, the refund decision or relevant notification must generally be issued within 10 working days.

However, the current framework does not prescribe a specific statutory period for completing the pre-refund inspection itself. The total processing time may therefore depend substantially on the complexity of the claim, the company’s risk profile, and the quality of its supporting records.

Partial Processing of Refund Claims

Under the risk-based framework, the tax authority may identify all or part of a refund application as high risk.

Where only part of the claim requires further inspection, the lower-risk portion may potentially continue through the refund process separately. This approach may help eligible businesses avoid having an entire application delayed because of concerns relating to specific transactions.

Withdrawal of an Application

A taxpayer may withdraw its VAT refund application before a refund decision is issued or before a pre-refund inspection decision is announced.

Following withdrawal, the eligible VAT amount may generally be carried forward as an input VAT credit in a later tax period, provided that the applicable deduction conditions continue to be satisfied.

Common Issues Identified During VAT Refund Audits

VAT refund reviews often extend beyond the application form itself. Tax authorities may examine the commercial substance of transactions, the validity of invoices, the movement of goods, and the relationship between payments and supporting documentation.

Common issues include:

• Input VAT claimed for expenses that do not directly support the company’s taxable business or production activities;
• Invoices declared in an incorrect tax period;
• Errors in electronic invoices or the use of invalid invoices;
• Inconsistent information across contracts, invoices, payment records, customs documents, and accounting entries;
• Investment-related input VAT declared under the company’s operating activities, or operating expenses incorrectly allocated to an investment project;
• Missing non-cash payment evidence;
• Export transactions without sufficient customs or bank payment documentation;
• Differences between VAT returns and accounting records;
• Suppliers displaying indicators of tax or invoice risk; and
• Legacy on-the-spot export and import transactions that do not meet the applicable requirements.

Businesses should also review the tax compliance and commercial legitimacy of key suppliers. Even when a purchaser acts in good faith, irregularities within the supply chain may lead to further questions during a refund inspection.

How Businesses Can Prepare for a VAT Refund Application

A VAT refund should be managed as an ongoing compliance process rather than as a one-time filing exercise.

Before submitting a claim, businesses should consider the following steps.

Confirm Eligibility

The company should first determine the applicable refund category and verify that it satisfies the required VAT threshold, investment status, business activity and tax-method conditions.

Reconcile Accounting and Tax Records

Input VAT balances should be reconciled against:

• VAT returns;
• General ledger accounts;
• Purchase listings;
• Electronic invoices;
• Customs declarations;
• Bank payments; and
• Investment-project records.

Any differences should be identified and resolved before the application is filed.

Review Supporting Documents

The company should confirm that contracts, invoices, delivery records, customs documents, payment evidence, and other supporting materials are valid and consistent.

Documents should demonstrate both the legal form and the commercial substance of each transaction included in the claim.

Separate Investment and Operating Expenses

Businesses applying for an investment-project refund should maintain clear accounting records for the project. Mixing project costs with expenses from existing operations may lead to adjustments or additional scrutiny.

Assess Supplier Risks

Companies should conduct reasonable checks on significant suppliers, particularly where transactions contribute materially to the refund amount. Supplier irregularities may increase the risk classification of the claim.

Prepare for Tax Authority Questions

Management should identify the employees responsible for accounting, tax, procurement, customs and treasury records. Responses provided during an inspection should be coordinated and supported by the company’s documents and systems.

Key Considerations for Foreign-Invested Enterprises

The expanded VAT refund framework creates meaningful opportunities for foreign-invested companies to recover qualifying input VAT and improve cash flow. This is particularly relevant to manufacturers, exporters, and businesses undertaking substantial expansion investments.

However, the revised process also gives tax authorities more scope to classify claims according to risk and verify information through electronic tax systems.

Foreign-invested enterprises should therefore evaluate VAT refund readiness before the accumulated balance becomes material. Early review can help identify documentation gaps, incorrect VAT treatment, payment issues, and inconsistencies that could otherwise delay the claim.

How Ascentium Vietnam Can Help

Ascentium Vietnam supports foreign-invested enterprises with VAT refund readiness assessments, application preparation, and tax authority reviews.

Our tax professionals can assist businesses with:

• Assessing VAT refund eligibility;
• Reviewing input VAT and supporting transactions;
• Reconciling accounting, tax, invoice, customs, and payment data;
• Identifying documentation and compliance gaps;
• Preparing and reviewing VAT refund applications;
• Supporting communications with the tax authorities; and
• Assisting during pre-refund inspections and post-refund audits.

A structured review before submission can help businesses strengthen their applications, reduce avoidable delays and manage potential compliance exposure.