VAT Refund for Investment Projects: What Enterprises Need to Know

The Value-Added Tax (VAT) refund for investment projects is a critical policy that helps Vietnamese businesses reduce financial burdens and optimize capital for development. However, the process requires meticulous preparation to ensure tax compliance. Below are six key points businesses must understand to secure VAT refunds effectively.

1. Conditions for VAT Refund Eligibility

To qualify for a VAT refund, businesses must meet the following conditions:

- Be registered to pay VAT using the deduction method.

- Have a new investment project, excluding projects for building houses for sale or lease that do not form fixed assets.

- The project must be located in a province or city different from the company’s headquarters.

- The input VAT not yet deducted must be at least VND 300 million.

2. Preparing Complete Refund Documentation

The VAT refund application for investment projects requires seven main documents as stipulated in Circular 80/2021/TT-BTC:

- Refund request form (Form 01/HT).

- Copy of the Investment Registration Certificate.

- Land use rights certificate and construction permit (if the project involves construction).

- Separate VAT declaration documents for the investment project.

Businesses must ensure the accuracy of their documentation to avoid rejections that could delay the process.

3. Scope of VAT Refund

VAT refunds apply only to input costs directly related to the investment project, such as:

- Basic construction costs.

- Purchases of machinery, equipment, and fixed assets.

Administrative or operational expenses, such as office rental costs, are not eligible for refunds. For example, VAT on production machinery (VND 2 billion) is refundable, but office rental costs are not considered.

4. Tax Authority’s Processing Procedure

Within three working days of receiving the application, the tax authority will:

- Notify the business of any required corrections if the documentation is incorrect.

- Approve or reject the refund based on eligibility.

Businesses should closely monitor the process and be prepared to provide clarifications if requested.

5. Separate VAT Declaration for the Project

Businesses must declare VAT for the investment project separately from their ongoing business activities. The input VAT of the project can be offset against the output VAT from business operations, optimizing cash flow.

6. Notes on Processing Time and Legal Risks

The refund process may be delayed if documentation is incomplete. Additionally, businesses must ensure tax compliance to avoid legal risks, such as refund rejections or penalties for incorrect declarations.

Don’t Let VAT Refund Procedures Slow Your Investment Progress!

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