Vietnam’s VAT Refund: Expanded Eligibility and Stricter Compliance Rules

Effective 1 July 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.

In addition, effective 1 July 2026, the new Tax Administration Law introduced changes to the VAT refund process, including updated procedures for handling VAT refund dossiers and revised application forms to align with Vietnam’s ongoing digital transformation and modernization of tax administration.

For manufacturers and foreign-invested enterprises (FIEs), understanding these changes is critical to managing cash flow, securing refund eligibility,  mitigating compliance risks and facilitating the tax authorities’ review and audit process for VAT refund purposes.

See also: Vietnam’s New VAT Law: Key Compliance Guidance

New VAT refund process

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.

Key changes include:

• Refund application: 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.
• Reduced documentation: 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.
• Risk-based review: 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.
• Processing timelines: 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.
• Withdrawal of refund applications: 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.

Overall, the revised framework places greater emphasis on the taxpayer’s risk profile and the quality, completeness, and consistency of its electronic tax records and supporting documentation. Accordingly, businesses should strengthen their documentation and internal controls to facilitate the VAT refund process and mitigate potential delays and compliance risks.

VAT refund under the 2025 VAT Law

According to the new VAT Law enacted in 2025, significant updates have been introduced for VAT refund, in particular:

• Allowing VAT refunds for business expansion investments during the investment stage, where the accumulated input VAT is VND 300 million (US$11,400) or more;
• Businesses with goods and services under a 5 per cent VAT rate, if undeducted input VAT reaches VND 300 million or more after 12 months or four quarters, can get a VAT refund. For multiple VAT rates, the refund is based on the revenue ratio; and
• Removing VAT refunds with respect to change of ownership, change of enterprise types, merger, consolidation, separation, and de-merger.

Certain cases where the taxpayer applies the VAT deduction method can apply for a VAT refund, including:

• Qualified new projects of taxpayers applying the VAT deduction method that are in the pre-operational investment phase and have accumulated creditable input VAT exceeding VND 300 million;
• Business expansion investments in the investment phase with accumulated creditable input VAT of VND 300 million or more;
• Exporters having excess input VAT creditable over VND 300 million (subject to conditions and the capped refundable amount);
• Certain cases of dissolution, in which businesses using the deduction method can claim a VAT refund if they have overpaid VAT or have input VAT amounts that have not been fully credited;
• Businesses solely producing goods and services with a 5 per cent VAT, and with unclaimed input VAT of VND 300 million or more after 12 months or four quarters, can get a VAT refund (For businesses with multiple VAT rates, the refund is based on revenue allocation); and
• Businesses involved in ODA projects or humanitarian aid receiving non-refundable aid can get VAT refunds on goods and services bought in Vietnam for these projects.

Conditions for VAT refund

According to Point 9, Article 15, 2025 VAT Law, businesses should meet these conditions for VAT refund:

• Pay VAT using the deduction method;
• Maintain accounting books and records in compliance with accounting laws;
• Hold bank accounts registered under their TIN; and
• Satisfy input VAT deduction rules.

Key highlights where businesses must pay close attention to secure VAT refund eligibility:

• Deferred payment: 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 (including any appendices), 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 (“OL 5487”), issued by the Tax Department on 25 November 2025, confirms that businesses can claim creditable input VAT if they have non-cash payment documentation.
• Imports and subsequently exports: VAT refunds are no longer applicable in cases where the business imports and subsequently exports the same goods. This means that import VAT paid at the time of importation will not be refunded under the VAT refund scheme for export activities.

Common challenges raised in a tax audit for VAT refund

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;
• Declaring input VAT for goods and services serving business and production (Form 01/GTGT) under goods and services for investment projects (Form 02/GTGT), and vice versa;
• 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;
• Exported goods and services without bank payment documents to satisfy conditions for VAT credit and refund; and
• On-the-spot export and import transactions for the period before the new VAT law. Before 1 July 2025, the application of the 0 percent VAT rate under the on-spot import and export scheme faced aggressive 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.

Takeaway

While the 2025 VAT reform expands refund opportunities, particularly for expansion investments and exporters, 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.

See also: Vietnam VAT Rates and Applicability in 2025: A Brief Guide

This article was last updated 26 August 2026.