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What businesses need to know about Tax Refunds and Value Added Tax

Tax refunds and value added tax are always hot topics that concern businesses. To obtain full tax refunds, businesses need to have a clear understanding of tax laws and current regulations. In this article, RSM Vietnam will help businesses gain a better understanding of tax refunds and the procedures for applying for value added tax refunds.


Table of contents:

I. Which businesses are eligible for tax refunds?

II. What documents are required for a value-added tax refund application?

III. How can RSM Vietnam assist businesses?

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Tax refunds and Value Added Tax

I. Which businesses are eligible for tax refunds?

According to Article 13 of Law No. 31/2013/QH13 dated June 19, 2013, amending and supplementing certain provisions of the Value-Added Tax Law, the cases eligible for tax refunds are as follows:


1.Businesses that pay value-added tax using the deduction method can receive a refund if they have input value-added tax that has not been fully deducted within the month or the quarter. In such cases, the remaining input value-added tax can be deducted in the following period. If, after at least twelve months from the first month or at least four quarters from the first quarter in which the un-deducted value-added tax still exists, businesses still have unrecovered input value-added tax, they are eligible for a tax refund.


In the case of businesses registered to pay value-added tax using the deduction method with a new investment project that is in the initial investment phase and have input value-added tax for goods and services used for the investment of at least three hundred million Vietnamese dong that has not been deducted, they are eligible for a value-added tax refund.


2.Businesses engaged in exporting goods or services in a month or quarter can receive a value-added tax refund if they have unrecovered input value-added tax of at least three hundred million Vietnamese dong for that month or quarter.


3. When transferring ownership, converting business entities, merging, consolidating, splitting, dissolving, going bankrupt, or terminating operations, and there is an excess of paid value-added tax or unrecovered input value-added tax.


4.Foreign individuals and Vietnamese nationals residing abroad, holding passports or entry documents issued by the competent foreign authorities, are eligible for a value-added tax refund on goods purchased in Vietnam and carried with them upon departing.


5.Value-added tax refunds for programs and projects utilizing Official Development Assistance (ODA) funds that are non-refundable or humanitarian aid are determined as follows:

a) The program/project owner, principal contractor, or organization appointed by the foreign donor to manage the program/project utilizing non-refundable ODA funds is eligible for a refund of the value-added tax paid on goods and services purchased in Vietnam for the program/project.

b) Organizations in Vietnam using non-refundable aid or humanitarian aid funds from foreign organizations or individuals to purchase goods and services for non-refundable aid or humanitarian aid programs in Vietnam are eligible for a refund of the value-added tax paid on those goods and services.


6. Entities entitled to enjoy diplomatic privileges and immunities under the provisions of the law on diplomatic privileges and immunities when purchasing goods and services in Vietnam are eligible for a value-added tax refund. This refund is based on the value-added tax amount indicated on the value-added tax invoice or payment document that already includes value-added tax.


7.Businesses that have a decision to refund value-added tax from the competent authority in accordance with the law, as well as cases of value-added tax refunds in accordance with international treaties to which the Socialist Republic of Vietnam is a member, are also eligible for a value-added tax refund.

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II. What documents are required for a value-added tax refund application?

According to Article 28 of the Regulation guiding the implementation of some provisions of the Tax Management Law and Government Decree No. 126/2020/NĐ-CP dated October 19, 2020, which details some provisions of tax management laws, the documentation required for a value-added tax refund application is as follows:


A value-added tax refund application in accordance with the value-added tax laws (except for cases of value-added tax refunds based on international treaties or value-added tax on unrecovered input when transferring ownership, converting business entities, merging, consolidating, splitting, dissolving, going bankrupt, or terminating operations as specified in Article 30 and Article 31 of this Regulation) must include:


1. A request for the fund of state budget revenues, as per Form No.01/HT issued in Appendix I of this Regulation.


2. In the case of a value-added tax refund for an investment project, the relevant documents include:


a) For investment project refunds:

a.1) A copy of the Investment Registration Certificate or Investment Certificate or Investment License, as required by the procedures for issuing the Investment Registration Certificate.

a.2) For projects involving construction work: A copy of the Land Use Rights Certificate or land allocation decision or land lease contract from the competent authority; construction permit.

a.3) A copy of the Articles of Association or Charter.

a.4) A copy of the business license for conditional business sectors; Certificate of meeting the conditions for conducting business in conditional business sectors; Documents from the competent state authority permitting business activities in conditional business sectors as specified in point c, clause 2, Article 10 of Government Decree No. 209/2013/ND-CP dated December 18, 2013 (as amended and supplemented in clause 6, Article 1 of Government Decree No. 100/2016/ND-CP dated July 1, 2016)

a.5) A list of invoices and documents for purchased goods and services in Form No. 01-1/HT issued in Appendix I of this Regulation, except when the taxpayer has submitted electronic invoices to the tax authority.

a.6) Decision on the establishment of the Project Management Board, Decision on the assignment of project management for the investment project owner, Organizational and operational regulations of the branch or Project Management Board (if the branch or Project Management Board is responsible for the refund).


b) In the case of a value-added tax refund for exported goods or services:

b.1) A list of invoices and documents for purchased goods and services in Form No. 01-1/HT issued in Appendix I of this Regulation, except when the taxpayer has submitted electronic invoices to the tax authority.

b.2) A list of customs declarations that have been cleared in accordance with customs laws for exported goods, in Form No. 01-2/HT issued in Appendix I of this Regulation.


c) In the case of a value-added tax refund for programs and projects utilizing non-refundable Official Development Assistance (ODA) funds:

c.1) In cases where non-refundable ODA funds are directly managed and implemented by the program/project owner:

c.1.1) A copy of the international treaty or agreement on non-refundable ODA funds or exchange of notes regarding the commitment and acceptance of non-refundable ODA funds; a copy of the Decision approving the project or non-project documents, or the Decision to invest in the program and project and the project feasibility study report as stipulated in points a and b, clause 2, Article 80 of Government Decree No. 56/2020/ND-CP dated May 25, 2020.

c.1.2) A request for confirmation of eligible project costs for project costs and a request for payment of investment capital for investment costs of the project owner as specified in point c, clause 2, Article 80 of Government Decree No. 56/2020/ND-CP dated May 25, 2020, and point a, clause 10, Article 10 of Government Decree No. 11/2020/ND-CP dated January 20, 2020.

c.1.3) A list of invoices and documents for purchased goods and services in Form No. 01-1/HT issued in Appendix I of this Regulation.

c.1.4) A copy of the document confirming the form of ODA program/project delivery from the ODA program/project management authority to the program/project owner for non-refundable ODA funds that are eligible for value-added tax refund, and confirmation that the state budget does not provide corresponding funding for value-added tax payment.

c.1.5) In cases where the program/project owner entrusts all or part of the program/project to another unit or organization for management and implementation, in accordance with the provisions of the law on ODA fund management and utilization, and this information is not included in the documents specified in points c.1.1 and c.1.4, in addition to the documents specified in points c.1.1, c.1.2, c.1.3, and c.1.4, a copy of the document on the assignment of program/project management for non-refundable ODA funds by the program/project owner to the unit or organization requesting the refund.

c.1.6) In cases where the main contractor submits the refund application, in addition to the documents specified in points c.1.1, c.1.2, c.1.3, and c.1.4, a copy of the contract signed between the project owner and the main contractor, showing the payment amount based on the bidding results, excluding value-added tax.

The taxpayer is only required to submit the documents specified in points c.1.1, c.1.4, c.1.5, c.1.6 of this section for the first-time tax refund application or when there are changes or additions.

c.2) In cases where non-refundable ODA funds are directly managed and implemented by the donor:

c.2.1) The documents as specified in point c.1.1 and c.1.3 of this section.

c.2.2) In cases where the donor appoints the Representative Office of the donor or an organization to manage and implement the program/project (except in cases specified in point c.2.3 of this section) but this information is not included in the documents specified in point c.1.1 of this section, the following additional documents are required:

c.2.2.1) A copy of the document on the assignment of program/project management for non-refundable ODA funds by the donor to the Representative Office of the donor or the organization appointed by the donor.

c.2.2.2) A copy of the document from the competent authority regarding the establishment of the Representative Office of the donor or the organization appointed by the donor.

c.2.3) In cases where the main contractor submits the refund application, in addition to the documents specified in point c.2.1 of this section, a copy of the contract signed between the donor and the main contractor, or a summary of the contract with confirmation from the donor regarding the contract signed between the donor and the main contractor, including information such as contract number, date of contract signing, contract duration, scope of work, contract value, payment method, and payment amount based on the bidding results, excluding value-added tax.


d) In the case of a value-added tax refund for goods and services purchased within the country using non-refundable aid funds that do not fall under Official Development Assistance (ODA) support:

d.1) A copy of the Decision approving the program/project documents, non-project aid, and program/project documents, non-project aid as specified in point a, clause 2, Article 24 of Government Decree No. 80/2020/ND-CP dated July 8, 2020.

d.2) A request for confirmation of eligible project costs for project costs and a request for payment of investment capital for investment costs of the project owner (in cases where non-refundable aid is received from state budget revenues) as specified in point b, clause 2, Article 24 of Government Decree No. 80/2020/ND-CP dated July 8, 2020, and point a, clause 10, Article 10 of Government Decree No. 11/2020/ND-CP dated January 20, 2020.

d.3) A list of invoices and documents for purchased goods and services in Form No. 01-1/HT issued in Appendix I of this Regulation.

Taxpayers are only required to submit the documents specified in point d.1 of this section for the first-time refund application or in the case of changes or additions.


đ) In the case of a value-added tax refund for goods and services purchased within the country using international urgent relief aid funds to support and overcome the consequences of natural disasters in Vietnam:

đ.1) A copy of the Decision to accept urgent relief aid (in cases of international urgent relief aid) or the Decision on the principle of accepting international urgent relief aid to overcome the consequences of natural disasters and international documents on urgent relief aid to overcome the consequences of natural disasters (in cases of international urgent relief aid to overcome the consequences of natural disasters) as specified in clauses 6, 7, and 8, Article 3 of Government Decree No. 50/2020/ND-CP dated April 20, 2020.

đ.2) A list of invoices and documents for purchased goods and services in Form No. 01-1/HT issued in Appendix I of this Regulation.

Taxpayers are only required to submit the documents specified in point d.1 of this section for the first-time refund application or in the case of changes or additions.


e) In the case of a value-added tax refund for diplomatic tax exemptions: e.1) A list of value-added tax on purchased goods and services for use by diplomatic missions using Form No. 01-3a/HT issued in Appendix I of this Regulation with confirmation from the State Protocol Department under the Ministry of Foreign Affairs regarding the eligibility of input costs for diplomatic tax exemption to be refunded. e.2) A list of diplomatic staff members who are eligible for a value-added tax refund using Form No. 01-3b/HT issued in Appendix I of this Regulation.


g) For a value-added tax refund for commercial banks acting as agents for refunding value-added tax for foreign tourists:

A list of documents for refunding value-added tax to foreign tourists using Form No. 01-4/HT issued in Appendix I of this Regulation.


h) In the case of a value-added tax refund according to the decision of a competent authority as prescribed by law: The decision of the competent authority.


III. How can RSM Vietnam assist businesses?

We, as one of the leading companies with expertise and capabilities in risk management in Vietnam, are ready to assist businesses in reviewing, compliance, and staying updated on the latest value-added tax regulations. Not only that, but we also have experience working with government authorities in tax audits, value-added tax refunds, and other business-related matters.


Our services include:

  1. Monthly/Quarterly Value-Added Tax Filing Support

  2. In-Depth Tax Review Services

  3. Ongoing Consulting Services

  4. Tax Audit Support Services

  5. Case-by-Case Consulting Services

  6. Value-Added Tax Refund Support Services

  7. Government Relations Support Services

See more Value-Added Tax Services


RELATED CONTENTS:


Guide on calculating, declaring, and paying Value-Added Tax

Guide on filing Foreign Contractor Tax ("FCT")

What do businesses need to know about taxes and invoices in 2021?




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