VAT Refunds in Vietnam

For foreign investors in Vietnam, a VAT refund is less a compliance formality than a cash-flow issue: input VAT tied up in an unresolved claim is working capital your business cannot use. Vietnam's VAT framework has changed substantially since mid-2025, a temporarily reduced rate, an eased refund condition that removes one of the more frustrating risks foreign businesses used to face, and a faster (if less predictable) processing framework.

Contributing Advisor

Mia Pham

Senior Manager, Corporate Accounting Services

What is changed in Vietnam’s VAT refund rules?

Several reforms have landed in quick succession, and together they change how a refund claim should be planned, not just how it is filed.

The most consequential change for foreign-invested companies is the second one. Under the previous rule, a refund could stall for months simply because a supplier, often a small vendor with no direct relationship to the claimant beyond the invoice, had not filed or paid its own VAT. That counterparty risk sat entirely outside the buyer's control and was a recurring source of frustration for compliant businesses. It no longer applies. Refund eligibility now turns on your own documentation and compliance, not your supplier's.

Is your business still paying 10 percent, or does the reduced 8 percent rate apply?

The 2-point reduction applies across importation, manufacturing, processing, and trading stages, but it does not apply uniformly. Several FDI-relevant sectors remain at the full 10 percent rate, and a Decision-stage cash-flow model built on a blanket "8 percent" assumption will misstate your refund exposure.

For groups with mixed activities, a manufacturer that also leases real estate, for example, or a logistics arm sitting inside a financial-services group , invoices need to be segmented by rate before a refund claim is filed, not reconciled afterward. It is also worth building the December 31, 2026, sunset date into any multi-year forecasting: absent a further extension, the rate reverts to 10 percent at that point.

Does your company qualify for a VAT refund in Vietnam?

To claim a refund, your business generally needs to: pay VAT under the deduction (credit) method; maintain accounting books and records that comply with Vietnamese accounting law; hold a bank account registered under its tax identification number; and satisfy the underlying input VAT deduction conditions.

Within that framework, the categories most relevant to foreign-invested enterprises are:

• Investment projects (new projects or business-expansion phases) with accumulated creditable input VAT of VND 300 million (roughly USD 11,000–12,000) or more.
• Exporters with excess creditable input VAT above the same VND 300 million threshold, subject to conditions and a capped refundable amount.
• Businesses supplying goods or services taxed at the 5 percent rate, where unclaimed input VAT reaches VND 300 million or more after 12 consecutive months or four consecutive quarters. Businesses with mixed rates (5% and 10%) allocate the refund based on revenue ratio.
• Dissolution cases, where a business using the deduction method has overpaid VAT or unclaimed input VAT at wind-down.
• ODA-funded or humanitarian aid projects, for goods and services purchased in Vietnam under non-refundable aid arrangements.

Which VAT refund cases no longer apply?

Two categories that used to generate refund claims have been narrowed or removed, and both are relevant to how you sequence a Vietnam investment:

• Import for subsequent re-export. Where a business imports and later re-exports the same goods, the import VAT paid is no longer refundable under the export refund route.
• Ownership and structural changes. Refunds tied to a change of ownership, conversion of enterprise type, merger, consolidation, separation, or de-merger have been removed from the eligible list; dissolution remains a distinct, still-eligible case. For any foreign investor planning an acquisition, joint-venture restructuring, or entity conversion in Vietnam, this means uncredited input VAT sitting on the target's books may no longer transfer out as a refund once the deal closes, a point worth surfacing during tax due diligence rather than after signing.

On-spot exports deserve a separate mention. Since July 1, 2025, a Vietnamese company selling goods that are delivered locally on a foreign buyer's instructions no longer loses 0 percent VAT eligibility simply because that foreign buyer has a commercial presence in Vietnam, a change directly relevant to contract-manufacturing and toll-processing arrangements common among investors.

How long will your VAT refund take?

This is usually the real question behind "are we eligible," and it deserves a direct answer.

As of July 1, 2026, a new risk-based framework (Decree 252/2026/ND-CP and Circular 89/2026/TT-BTC) replaced the previous flat 40-working-day processing cap:

• Tax authorities must confirm whether a dossier is accepted within 3 working days.
• For refund-first, audit-later cases, the refund decision is generally issued within 6 working days of acceptance.
• For cases flagged for pre-refund inspection, the decision follows within 10 working days of the inspection's conclusion.

On paper, that's faster than the old regime. The catch, and the point worth building into your cash-flow planning, is that no statutory deadline governs how long the pre-refund inspection itself takes. A claim classified as higher-risk can sit in inspection for an open-ended period before the 10-day clock even starts.

The practical implication: treat the statutory windows as a floor, not a forecast. Businesses with recurring, well-documented, low-risk claims (typically exporters with clean customs reconciliation) tend to move through the fast track; businesses with first-time claims, complex ownership structures, or unresolved on-spot export history from before July 2025 should plan for the inspection scenario as the base case, not the exception.

What documentation mistakes most often sink a VAT refund claim?

The categories that most often trigger an audit or a rejected claim are consistent enough to plan around:

• Input VAT on goods or services not clearly tied to business or production activity.
• Invoices credited in the wrong tax period, a common issue when internal reconciliation lags behind the invoice date.
• Mixing up the declaration line for ordinary business input VAT with the line for investment-project input VAT. The two are tracked and refunded differently, and the specific form references changed under Circular 89/2026/TT-BTC, confirm current form numbers before filing rather than relying on older guidance.
• Invalid or unlawfully issued invoices, including invoices from suppliers later found to be non-operational, a risk that remains even though the seller's tax payment status no longer blocks your refund.
• Missing non-cash payment documentation. For purchases of VND 5 million or more, input VAT must be supported by bank-transfer evidence (this threshold was reduced from VND 20 million, not eliminated, treat any source claiming full removal with caution). For deferred or installment payments, if bank-transfer documentation isn't in place by the contractual payment date, the corresponding input VAT must be adjusted out in that tax period.
• Unresolved on-spot export positions from before July 1, 2025, where the 0 percent rate was contested under the old commercial-presence rule.

None of these are new risks in kind, but several of the thresholds and reference points shifted in the past twelve months, which is exactly where legacy internal checklists tend to fall out of date.

What about VAT refunds for tourists and business travelers?

Briefly, for context: Vietnam's tourist VAT refund scheme moved to a fully electronic system replacing the paper-based counter process with a digital link between customs, tax authorities, banks, and registered sellers.

• Eligible foreign passport holders can claim on purchases of at least VND 2,000,000 per invoice from registered stores.
• Passport, goods, and invoices must be presented to customs at least 30 minutes before departure.
• The refund equals 85 percent of the VAT paid, credited to a bank account or card within 7–15 days; the remaining 15 percent is retained as a processing fee.

This is separate from the business refund process above, but it is worth knowing, if your executives or staff make personal purchases while traveling in Vietnam, the old "locate the counter, hand over paperwork" experience no longer applies.

Should you get local support?

The reforms above are, on balance, favorable to foreign investors: counterparty risk on refunds is gone, on-spot export treatment is clearer, and the formal processing clock is shorter for well-prepared claims. But "shorter" is conditional on documentation quality and risk classification, neither of which a company controls once a dossier is submitted.

For a controller managing this alongside other responsibilities, the practical risk isn't understanding the rules; it is tracking which threshold, form, or exclusion changed most recently, and building the dossier so the claim reads as low-risk rather than needing inspection to resolve. That's where dedicated support tends to pay for itself, particularly around VAT registration, filing, and refund-dossier preparation; import/export and customs advisory for exporters relying on the 0% rate; and pre-investment or M&A tax due diligence where uncredited input VAT sitting on a target's books may no longer be recoverable after closing.

If your business is approaching the VND 300 million input VAT threshold, planning a restructuring, or simply hasn't revisited its VAT refund process since before mid-2025, it is worth a conversation before your next filing rather than after a delay.