Tax refund service for investment projects in Vietnam

The requirements for conditions, dossiers and procedures related to VAT refund for investment projects are quite complicated, stipulated in many different legal documents. According to the provisions of the VAT Law, if the VAT purchased during the investment period meets the conditions as prescribed, the enterprise can refund this VAT. Viet An Tax Agent will help you learn about VAT refund for investment projects in the article below.

What is an investment project?

Clause 4, Article 3 of the Law on Investment 2020 stipulates that an investment project is a collection of proposals for medium- or long-term capital investment to carry out business investment activities in a specific area, within a specified period of time.

At the same time, Clauses 5, 6 and 7, Article 3 of the Law on Investment 2020 stipulate the types of investment projects as follows:

• Expansion Investment Project: An investment project that develops an existing investment project by expanding its scale, increasing capacity, innovating technology, reducing pollution, or improving the environment.
• New Investment Project: An investment project implemented for the first time or an investment project independent of an existing investment project.
• Innovative Startup Investment Project: An investment project that implements ideas based on the exploitation of intellectual property, technology, new business models, and has the potential for rapid growth.

Conditions for business establishments with new investment projects to be refunded VAT

On October 12, 2023, the General Department of Taxation issued Official Letter 4525/TCT-CS on responding to proposals on tax policies and administrative procedures of the Japanese Business Association in Vietnam, in which, the General Department of Taxation responded to the VAT refund as follows:

In Clause 3, Article 1 of the VAT Law 2016, it is stipulated:

“1. … In case a business establishment that has registered to pay VAT by the deduction method has a new investment project, which is in the investment stage and has an undeducted value-added tax amount of goods or services purchased for investment use and has a remaining tax amount of VND three hundred million or more, it shall be entitled to a VAT refund increase.”

At the same time, according to Clause 3, Article 1 of Decree 49/2022/ND-CP, there are detailed regulations on VAT refund for investment projects as follows:

2. Business establishments eligible for tax refund for investment projects are as follows:

a) Business establishments that have registered their business or registered to pay VAT by the deduction method (including business establishments newly established from investment projects) have new investment projects (including investment projects divided into multiple investment stages or multiple investment items) in accordance with the Law on Investment in their localities the same province or city or another province or city where the head office is located (except for the case specified at Point c of this Clause and the investment project on construction of houses for sale, investment projects without the formation of fixed assets) that are in the investment stage or the project on prospecting, exploration and development of oil and gas fields that are in the investment stage, having an input value-added tax amount of goods and services arising in the cumulative investment period that has not yet been fully deducted from VND 300 million or more shall be refunded value-added tax.

Business establishments shall declare separate value-added tax on investment projects and must offset the input value-added tax amount of the investment project against the payable value-added tax amount of ongoing production and business activities (if any). After clearing, if the cumulative input VAT amount of the investment project has not been fully deducted is VND 300 million or more, the VAT shall be refunded.

b) For investment projects of business establishments in conditional business lines in the following cases, business establishments shall be entitled to VAT refund for investment projects under the provisions of Point a of this Clause:

b.1) An investment project in the investment stage, in accordance with the provisions of the investment law or specialized laws, has been granted a conditional business line business license by a competent state agency in one of the following forms: License or certificate or written certification,  approve.

b.2) An investment project in the investment stage, according to the provisions of the investment law or specialized laws, is not required to request a competent state agency to grant a conditional business line business license in one of the following forms: License or certificate or written certification,  approve.

b.3) An investment project under the provisions of the investment law or specialized laws is not required to have a business license for conditional business lines in one of the following forms: License or certificate or written certification or approval.”

Thus, business establishments (including business establishments newly established from investment projects) are entitled to VAT refund when:

VAT refund dossier for investment projects

Regarding the dossier for VAT refund, comply with the provisions of Point a, Clause 2, Article 28 of Circular 80/2021/TT-BTC dated September 29, 2021 (amended and supplemented in Article 2 of Circular 13/2023/TT-BTC dated February 28, 2023).

• At Point a, Clause 2, Article 28 of Circular 80/2021/TT-BTC dated 29/9/2021 (amended and supplemented in Article 2 of Circular 13/2023/TT-BTC dated 28/02/2023), guiding the dossier of application for VAT refund in case of tax refund for investment projects, including:
• A copy of the investment registration certificate or investment certificate or investment license, in case procedures for issuance of an investment registration certificate are required;
• For projects with construction works: A copy of the land use right certificate or land allocation decision or land lease contract of a competent agency; construction permits;
• A copy of the charter capital contribution voucher;
• For investment projects of business establishments engaged in conditional business lines in the investment stage, according to the provisions of the investment law and specialized laws that have been granted business licenses for conditional business lines by competent state agencies as prescribed in Clause 3, Article 1 of Decree 49/2022/ND-CP: A copy of one of the forms of License or Certificate or written certification or approval of business lines subject to conditional business investment.
• A list of invoices and documents of purchased goods and services according to form No. 01-1/HT issued together with Appendix I of Circular 80/2021/TT-BTC, unless the taxpayer has sent e-invoices to the tax authority;
• Decision on establishment of the project management unit, decision on assignment of investment project management of the investment project owner, Regulation on organization and operation of the branch or the investment project management board (if the branch or project management board provides tax refund).

If you have any difficulties or questions related to tax refund services for investment projects, please contact Viet An Tax Agent for the most specific advice.