Key takeaways

  1. FDI companies need minimum 300 million VND uncredited input VAT to qualify for export and investment project refunds.
  2. New 5% refund rate applies to eligible FDI companies based on export volumes starting July 1, 2025.
  3. Suppliers must maintain current tax declarations and zero outstanding debts for refund eligibility from July 2025.
  4. Import-for-re-export operations and M&A transactions are eliminated from VAT refund eligibility beginning July 2025.
  5. Processing timelines range from 6-40 working days depending on risk level and inspection requirements.

Vietnam’s 2025 VAT refund framework introduces substantial modifications for foreign direct investment companies, establishing a standardized 5% refund rate while implementing stringent supplier compliance requirements and eliminating previously available refund categories. These regulatory changes, effective July 1, 2025, mandate thorough documentation processes, extended processing timelines of up to 40 working days, and strict eligibility thresholds exceeding 300 million VND in uncredited input VAT. Understanding these new parameters becomes critical for maintaining operational efficiency and cash flow optimization.

Key VAT refund categories available to for FDI companies

Foreign-invested enterprises in Vietnam can access VAT refunds through two primary categories: export activities and qualifying investment projects, both requiring uncredited input VAT to reach the threshold of 300 million VND or approximately 12,000 USD. Beginning July 1, 2025, refund eligibility will depend heavily on supplier compliance status, mandating that suppliers maintain current tax declarations and possess no outstanding tax debts to the authorities. Certain business models face complete elimination from VAT refund programs, specifically import-for-re-export operations and transactions involving mergers, acquisitions, and corporate restructuring activities.

Export activity refunds

Export activities represent the primary avenue through which enterprises can recover substantial VAT amounts, provided they meet specific threshold requirements and maintain proper documentation throughout the refund process. Foreign-invested enterprises must accumulate uncredited input VAT of at least 300 million VND from export operations to qualify for refunds, making Export strategies essential for maximizing recovery potential. However, refund challenges emerge from stringent documentation requirements and supplier compliance obligations, particularly the new July 2025 mandate requiring suppliers to maintain current tax declarations without outstanding debts.

Investment Project Refunds

Beyond export-related VAT recovery mechanisms, FDI (Foreign Direct Investment) companies  constitute the second major category through which enterprises can reclaim substantial input VAT amounts, operating under identical threshold requirements but applying to capital expenditures and project development activities. FDI companies conducting qualifying investment projects can recover input VAT exceeding 300 million VND, providing critical project funding support during capital-intensive phases. These investment incentives deliver significant refund benefits by reducing immediate tax burdens on equipment purchases, construction costs, and infrastructure development. The mechanism helps mitigate capital outflows during project implementation, particularly benefiting manufacturing and industrial ventures requiring substantial upfront investments. However, businesses need to closely consider how new supplier rules starting July 1, 2025, will affect their ability to get refunds for some types of investments.

Supplier compliance requirements

The upcoming regulatory changes will fundamentally reshape how enterprises approach VAT refund applications, with supplier compliance requirements becoming a critical determinant of eligibility starting July 1, 2025. Foreign-invested enterprises must guarantee their suppliers have filed tax declarations and maintain zero outstanding tax debts before VAT refunds can be processed.

This necessitates thorough supplier training programs to educate partners about compliance obligations and documentation requirements. Companies should implement robust ethical auditing protocols to verify supplier tax status regularly, while conducting thorough risk assessment evaluations to identify potential compliance gaps. Effective contract enforcement mechanisms must be established to mandate supplier compliance standards, supported by continuous performance monitoring systems that track supplier tax declaration status and debt positions throughout business relationships.

Excluded business models

While thorough supplier compliance frameworks establish the foundation for successful VAT refund applications, foreign-invested enterprises must simultaneously navigate significant exclusions that eliminate refund eligibility for specific business models under the new regulatory framework.

Exclusion examples include two primary categories: import operations for subsequent re-export activities and transactions involving mergers, acquisitions, and corporate restructuring initiatives. These policy impacts fundamentally restrict refund opportunities for companies operating under these models, regardless of their VAT accumulation levels or supplier compliance status.

Foreign-invested enterprises must explore business alternatives such as restructuring operational models or shifting toward manufacturing-based activities. The economic effects of these exclusions force strategic shifts in business planning, compelling companies to reassess their operational frameworks and investment strategies to maintain VAT refund eligibility under Vietnam’s revised regulatory environment.

New mandatory requirements for VAT refunds starting July 2025

Starting July 1, 2025, Vietnam will implement significant changes to VAT refund eligibility requirements that will fundamentally alter the compliance landscape for foreign-invested enterprises. The new regulations introduce mandatory verification processes for supplier compliance, requiring that all suppliers have filed their tax declarations and maintain zero outstanding tax debts before companies can claim VAT refunds. Additionally, the revised framework eliminates VAT refund eligibility for two specific business models: import-for-re-export operations and transactions involving mergers, acquisitions, and corporate restructuring activities.

Eight Categories of Eligible VAT Refunds

  1. Exported Goods and Services: VAT refunds are available for input VAT related to the export of goods and services, provided all compliance and documentation requirements are met.
  2. Investment Projects: Refunds apply to businesses during the investment phase or for expansion investments, as long as the input VAT accumulated is at least VND 300 million and application is made within one year of project completion.
  3. 5% VAT Rate Business Establishments (New 2025 Regulation): Businesses exclusively producing goods or services subject to the 5% VAT rate can claim a refund if their uncredited input VAT reaches VND 300 million or more over 12 consecutive months or four quarters.
  4. Dissolution, Bankruptcy, or Conversion: Refunds may be claimed when businesses dissolve, go bankrupt, or change business structure (subject to new restrictions as per the latest circulars).
  5. Refunds for Foreigners and Overseas Vietnamese: Foreign visitors and overseas Vietnamese are entitled to VAT refunds on eligible goods purchased in Vietnam under specific conditions.
  6. Projects Using ODA and Aid: Official Development Assistance (ODA) and non-refundable aid projects are eligible for VAT refunds on domestic purchases related to project activities.
  7. Subjects Enjoying Diplomatic Privileges: Entities and individuals benefiting from diplomatic immunity can apply for VAT refunds on their purchases, as per bilateral/multilateral agreements.
  8. Other Special Cases: Includes projects or transactions identified under special government provisions, such as certain indirect supply chains or government-mandated activities.

Thresholds and timelines (such as the VND300 million input VAT minimum and one-year refund window) are consistently applied across most main categories.

Procedures and audits have become more rigorous, including new requirements that the supplier’s tax status and declaration history be verified before refunds are approved.

Supplier compliance verification requirements

Beginning July 1, 2025, Vietnam will implement strict requirements for verifying supplier compliance that fundamentally alter the VAT refund approval process for foreign direct investment companies. These regulations mandate that suppliers must have filed complete tax declarations and maintain zero outstanding tax debts before businesses can claim VAT refunds on related transactions.

Companies must conduct thorough supplier audits to verify their compliance status, utilizing specialized compliance software to track the tax filing histories of suppliers and their debt positions. Organizations require dedicated verification training for procurement and finance teams to guarantee proper documentation and assessment procedures. Continuous risk monitoring systems must evaluate supplier compliance throughout contractual relationships, while standards evaluation processes determine whether suppliers meet the new regulatory thresholds for VAT refund eligibility.

Eliminated business model categories

The thorough restructuring of Vietnam’s VAT refund framework eliminates two specific business model categories from eligibility considerations, fundamentally reshaping operational strategies for foreign direct investment companies across multiple sectors.

Key Eliminated Categories:

  1. Import-for-Re-export Operations – Model examples include trading companies importing raw materials or finished goods exclusively for subsequent export, historically representing significant VAT refund volumes for intermediary businesses.
  2. Mergers and Acquisitions Transactions – Corporate restructuring activities, including asset transfers, equity transactions, and consolidation processes, lose VAT refund eligibility under regulatory shifts effective July 2025.
  3. Strategic Business Implications – Future implications require companies to develop alternative strategies, potentially restructuring operations to maintain cash flow advantages previously derived from these eliminated refund categories, fundamentally altering historical context surrounding FDI tax planning approaches.

Tax declaration dependencies

Thorough supplier compliance verification emerges as a critical prerequisite for VAT refund eligibility, fundamentally transforming the administrative landscape for foreign direct investment companies seeking tax recoveries under Vietnam’s revised regulatory framework. Beginning July 1, 2025, companies must guarantee all suppliers have filed complete tax declarations and maintain zero outstanding tax debts before processing refund applications. This requirement introduces significant declaration risks, as incomplete supplier documentation can halt entire refund processes. Companies must evaluate interfirm links carefully, conducting historical analysis of supplier tax compliance to avoid delays.

Outstanding debt restrictions

Thorough debt clearance obligations now constitute an additional layer of compliance scrutiny that foreign direct investment companies must navigate when pursuing VAT refund applications under Vietnam’s enhanced regulatory requirements. These regulations require thorough financial assessment, incorporating sophisticated debt recovery tactics and stringent credit limit policies to guarantee applicant viability. Companies experiencing outstanding tax obligations face immediate disqualification, regardless of their export volume or investment project status.

Key compliance requirements include:

  1. Complete tax debt settlement – All outstanding obligations must be resolved before refund eligibility
  2. Financial leverage assessment – Authorities evaluate company stability using bankruptcy avoidance strategies
  3. Interest rate effects monitoring – Accumulated penalties and interest charges impact qualification status

Financial leverage risks substantially influence approval decisions, as tax authorities prioritize companies demonstrating sound fiscal management and sustainable operational frameworks.

Processing timeline and documentation requirements for FDI companies

Understanding processing timelines and documentation requirements becomes critical for FDI companies seeking VAT refunds, as these elements directly determine both the speed of reimbursement and the likelihood of approval.

Timeline Factors vary substantially based on company risk classification and case complexity. Priority cases classified as low-risk are processed within 6 working days, whereas standard applications take 15 to 20 working days. Cases necessitating inspection extend to 40 working days, creating substantial cash flow implications for FDI operations.

Documentation essentials include VAT invoices, export declarations, customs documents, and financial statements demonstrating eligible transactions. Processing stages encompass initial submission review, document verification, field inspection when required, and final approval determination.

Requirement updates effective July 2025 mandate supplier compliance verification, ensuring upstream vendors maintain current tax declarations without outstanding debts. Submission guidelines specify electronic filing through the national tax portal, with complete documentation packages required to prevent processing delays and potential rejections that compromise refund eligibility.