Vietnam Expands VAT Refund Eligibility and Rules
Effective July 1, 2025, Vietnam’s revised VAT framework reshapes the country’s refund regime, allowing broader access to refunds for qualifying investment projects, exporters, and businesses subject to the 5 per cent VAT rate. At the same time, the law introduces stricter documentation standards, removes certain refund cases, and reinforces audit oversight.
According to the new VAT Law enacted in 2025, significant updates have been introduced for VAT refund, in particular for manufacturers and foreign-invested enterprises (FIEs). The 2026 tax administration rules introduce a more standardised and risk-based refund process. Businesses should maintain accurate electronic tax records, ensure supporting documents are complete and consistent, and monitor refund applications closely to minimise delays, inspection risks, or refund denials.
Decree No. 252/2026/ND-CP and Circular No. 89/2026/TT-BTC, effective from 1 July 2026, introduce more standardised and risk-based procedures for VAT refund applications. Circular 89 introduces updated VAT refund forms and procedures to align with the new tax administration framework and Vietnam’s ongoing digital transformation of tax administration. For VAT refund under the export scheme, certain supporting forms and documentary requirements have been removed, with greater reliance on electronically available tax and invoice data. Tax authorities can use information already available through their tax administration systems when processing refund claims, reducing the need for taxpayers to repeatedly submit information already on record.
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Decree 252 allows tax authorities to identify a refund claim, or part of a claim, as high risk for pre-refund inspection. The lower-risk portion may continue to be processed separately. The tax authorities must notify taxpayers whether a VAT refund dossier is accepted within three working days. For refund-first, audit-later cases, the refund decision or relevant notification is generally issued within six working days from the date of acceptance. For cases subject to pre-refund inspection, the refund decision or relevant notification must be issued within 10 working days after the tax authorities issue their inspection conclusion or violation-handling decision.
These timelines replace the previous 40-working-day period calculated from the date the tax authorities received a complete VAT refund dossier. However, a key change under the new framework is that no specific statutory timeline is prescribed for the tax authorities to complete a pre-refund inspection. This may create uncertainty for businesses, as the overall timeline for receiving a VAT refund could vary depending on the duration of the tax authorities’ inspection. Taxpayers may cancel a refund application before a refund decision is issued or a pre-refund inspection decision is announced. Following cancellation, the refundable VAT can be carried forward as input VAT credit in a subsequent tax period, provided the applicable deduction conditions are met.
Compliance Challenges and Documentation
Refunds are no longer applicable in cases where the business imports and subsequently exports the same goods. This means import VAT paid at the time of importation will not be refunded under the VAT refund scheme for export activities. For goods or services purchased on instalment or deferred payment with a value of VND 5 million or more, if there is no non-cash payment documentation at the contractually agreed payment date, the business must declare and adjust the creditable input VAT corresponding to the value of such goods or services in the tax period when the payment is due. Official Letter No. 5487/CT-CS confirms that businesses can claim creditable input VAT if they have non-cash payment documentation.
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There are certain cases that could trigger a VAT refund audit, including input VAT on goods and services not serving business or production activities, declaration and crediting of input VAT based on erroneous invoices recorded in the incorrect tax period, and declaring input VAT for goods and services serving business and production under goods and services for investment projects, and vice versa. Other triggers include the use of invalid invoices or unlawful use of invoices, lack of non-cash payment documents for purchased goods and services required for proper VAT deduction, and exported goods and services without bank payment documents to satisfy conditions for VAT credit and refund. On-the-spot export and import transactions for the period before the new VAT law also face challenges, especially when the foreign buyer had a commercial presence in Vietnam. This position was reinforced by Official Letter No. 1872/BTC-TCT issued by the Ministry of Finance on February 17, 2025.
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Strict adherence to the new requirements is mandatory for maintaining compliance. The updated regulations reflect a shift towards greater efficiency in tax processing. Businesses must stay informed about these changes to avoid potential penalties.
