VAT refund

What is a VAT refund? This is a form of tax authority refunding the value added tax that a business or individual has paid in excess, or has not fully deducted from input. Common cases include exports, new investment projects, and businesses that have not fully deducted input tax.

VAT refunds play an important role in improving cash flow, increasing financial transparency and promoting export activities. The following article will analyze in depth the conditions, procedures, calculations and practical examples of tax refunds according to the latest regulations in 2025 of Circular 80/2021 and supplementary documents.

What is VAT refund?

Value added tax refund is the process by which tax authorities refund the amount of tax that an organization or individual has paid to the state budget but is eligible for refund according to legal regulations. This is one of the financial mechanisms to ensure fairness and reasonableness in the implementation of tax obligations.

VAT refund is different from tax deduction. If deduction is the direct deduction of valid input tax from tax liability in the period, then tax refund is the taxpayer receiving back the amount of money that has been overpaid or arising from export activities, investment or other special cases.

The legal basis for VAT refund procedures is clearly stipulated in Article 19 of the Law on Value Added Tax 2008, amended and supplemented in 2014, and implementing guidance documents from tax authorities.

When is VAT refunded?

VAT refund when exporting goods and services

According to Clause 1, Article 19 of Circular 80/2021/TT-BTC, enterprises exporting goods and services abroad or into duty-free zones will be refunded VAT if they meet the conditions on invoices, documents, customs declarations and bank payments.

Tax refund for new investment projects

Clause 3, Article 1 of Circular 130/2016/TT-BTC stipulates that new investment projects in the investment phase, not yet put into production and business operations, generating input VAT of VND 300 million or more in a month or quarter will be considered for tax refund.

Refund when there is remaining input tax that has not been fully deducted

Enterprises with input VAT that has not been fully deducted after 12 months or 4 consecutive quarters will be refunded if they meet the conditions for timely declaration and payment according to Article 18 of Circular 219/2013/TT-BTC.

How to calculate VAT refund

The method of calculating value added tax refund is based on the principle of comparing input and output tax amounts in the declaration period. The calculation formula is as follows:

Basic formula:

VAT refunded = Input VAT – Output VAT

• If the result is negative (input tax is greater than output tax), the business is eligible to claim a tax refund.

• If the result is positive (output tax is greater than input tax), the enterprise needs to pay the difference to the state budget.

Example:

To clarify how to apply the VAT refund formula in practice, below is a specific situation that businesses may encounter during the tax declaration process.

During the tax period, the enterprise incurred input VAT of VND500 million and output VAT of VND300 million. Since the input tax is greater than the output tax, the difference of VND200 million is determined as the tax refund. According to current regulations, the enterprise can apply for a tax refund to receive this amount from the state budget.

Actual VAT refund example

How do exporting businesses get VAT refunds?

Export is one of the common cases eligible for VAT refund according to the provisions of Article 19 of the Law on VAT and the guidance in Circular 219/2013/TT-BTC. The VAT rate applicable to exported goods is 0%, while input costs such as raw materials, logistics services, transportation, etc. are still subject to input VAT from 5% to 10%.

Real life situation: A rice exporting enterprise incurred a total input VAT of VND 800 million during the period. This enterprise exported about 70% of output, so the input tax was allocated accordingly and was eligible for a tax refund.

Completed results: The enterprise was refunded 560 million VND, corresponding to the rate of exported goods subject to tax rate 0%.

Points to note: To receive a tax refund, businesses must have complete bank payment documents, export contracts, customs declarations, and valid VAT invoices. In case the documents are missing or do not match the data, the tax refund may be suspended or collected.

Are new investment projects eligible for tax refunds?

According to Clause 3, Article 1 of Law No. 106/2016/QH13, enterprises implementing new investment projects in investment incentive sectors or in investment incentive areas may be refunded input VAT that has not been deducted.

Real life situation: A project to build a large-scale consumer goods factory in a southern province had a total input VAT incurred during the investment phase of VND1.2 billion. In the initial phase of operation, revenue was low, with output tax only reaching VND400 million.

Completed results: The difference of VND 800 million will be considered for tax refund if it meets the conditions of legal documents, investment certificates, construction permits, input invoices and has not yet fully entered into production and business.

Important Note: Investment projects must have their own tax codes, separate accounts and not yet officially put into operation to be considered for tax refunds for each investment phase.

Enterprises are subject to input VAT for many periods.

Many businesses operating in trade or services are not refunded tax immediately in each period, leading to a situation of input VAT surplus for many consecutive months. This is a fairly common situation for units with low VAT taxable revenue or no revenue.

Real life situation: A business declares taxes monthly, continuously incurring input tax greater than output due to investment in system upgrades, equipment purchases and technology services. After 6 months, the amount of VAT not yet deducted has accumulated up to 300 million VND.

Completed results: Enterprises can file tax refund applications for accumulated tax balances if there are no violations regarding invoices, documents, tax debts or other legal issues.

Common problems: Many cases of tax refunds are denied due to violations of invalid electronic invoices, errors in input declarations or the goods and service provider is no longer in operation. This is the reason why businesses need to periodically check the legality of suppliers before preparing tax refund dossiers.

Cases where VAT refund is not possible

Not all input VAT is eligible for refund. Under current regulations, the tax authority will refuse a refund if the taxpayer violates one of the conditions or falls under the exclusions specified in Article 20 Circular 80/2021/TT-BTC.

Invoice is invalid or not eligible for deduction

One of the common reasons for tax refund rejection is the use of invalid VAT invoices. Specifically:

• The invoice does not contain all required information such as tax code, seller name, invoice date.

• The invoice does not have a valid electronic signature or is not issued in accordance with the provisions of law on electronic invoices.

• Input invoices from businesses that have absconded, ceased operations or no longer have a business address.

By law, these invoices are not deductible and therefore cannot be used for tax refunds.

Transactions that did not occur in reality or are not subject to tax refund

Cases of false sales, false declaration of goods and services, or false invoices are not eligible for tax refunds. In addition, input taxes arising from non-refundable activities are also excluded. For example:

• Internal consumption activities.

• Purchase of goods for gifts that do not serve the production and business of goods subject to VAT.

• Transactions without non-cash payment documents (in mandatory cases).

Goods and services that are not taxable or not taxable in their true nature

According to Point b Clause 2 Article 20 Circular 80/2021/TT-BTC, the following cases are not eligible for tax refund:

“Taxpayers have goods and services that are not subject to VAT, are not subject to VAT, or have goods and services that do not generate actual sales activities, or have incorrect deduction declarations.”

This means that if a business is operating in the field of selling non-taxable goods (such as education, healthcare, etc.), the input tax will not be considered for refund, even if there is a valid invoice.

Fraudulent behavior, tax evasion

If the tax authority determines that a business has made false declarations or created false tax refund documents, the documents will be rejected and may be subject to penalties, additional collection, or criminal prosecution depending on the severity of the violation. This is an important point that businesses need to pay special attention to when preparing tax refund documents.

Are individuals eligible for VAT refunds?

Conditions for VAT refund for individuals

• Foreign individuals who purchase goods in Vietnam with VAT invoices and leave Vietnam for no more than 60 days.
• The sales store must be a tax refund point recognized by the General Department of Taxation.

Tax refund procedures for individuals

• Present original invoices, documents, passport, and purchase receipts.
• Register with customs and receive your refund at the border or via bank within 60 days.

Latest VAT refund regulations in 2025

The VAT refund mechanism is being increasingly improved to ensure transparency, shorten processing time and apply technology in tax management. In 2025, a number of new regulations were issued to improve the tax refund process to make it more convenient for taxpayers.

Current legal basis

Regulations on VAT refunds are updated according to the following legal document system:

• Circular 80/2021/TT-BTC dated September 29, 2021 of the Ministry of Finance providing guidance on tax management for enterprises with tax refund activities.

• The Law on Tax Administration 2019, amended and supplemented in 2022, stipulates the rights and obligations of taxpayers and the responsibilities of tax authorities in handling tax refunds.

• Official dispatch No. 1164/TCT-KK dated June 5, 2025 of the General Department of Taxation on instructions for updating the tax refund settlement process via the electronic system.

New highlights in VAT refund in 2025

Changes in 2025 show a strong trend of digital transformation in tax administration. Shortening the processing time from 10 to 5 working days and completely switching to electronic filing not only helps save costs and time for businesses but also minimizes legal risks in document inspection. At the same time, the electronic inspection mechanism replaces manual post-inspection, helping to increase the transparency and efficiency of tax authorities in the supervision stage.

Detailed VAT refund process in 2025

The VAT refund procedure is now carried out entirely electronically, helping businesses save time and making the application process transparent. Below are the basic steps for businesses to make a VAT refund:

Step 1: Prepare complete and correct documents

Enterprises need to prepare the necessary documents as prescribed in Article 28 of Circular 80/2021/TT-BTC. Depending on the type of tax refund (export, new investment, ODA project...), the dossier may include:

• VAT declaration for the period in which the refund request is made

• List of invoices and vouchers for purchased goods and services

• Export contract and customs declaration (if tax refund for exported goods)

• Non-cash payment documents (payment orders, bank statements, etc.)

• Explain the production and business situation if requested.

Step 2: Submit application via electronic portal

Enterprises submit tax refund applications through the General Department of Taxation's electronic information portal at the address: https://thuedientu.gdt.gov.vn

Here, taxpayers log in with the account registered with the tax authority, select "Electronic tax refund", upload documents and sign confirmation with a digital signature.

Step 3: Tax authorities receive and process documents

Within 05 working days from the date of receiving the complete and valid dossier, the tax authority will review and evaluate the completeness and accuracy of the dossier. If no risks are detected, the tax authority will issue a tax refund decision within the period without prior inspection.

In case the application is questionable or subject to pre-refund inspection, the processing time may be extended and the enterprise will receive specific notification.

Step 4: Receive your tax refund

Once a refund decision is made, the refund will be transferred directly to the business's bank account registered with the tax authority. The transfer is usually made within 1–2 business days after the decision is made.

Common mistakes that cause tax refund applications to be rejected

Despite following the correct procedures, many businesses still experience tax refund applications being rejected or having to wait for a long time to process due to the following common errors:

• Invalid or duplicate invoices: Enterprises using VAT invoices with identification errors, without electronic authentication codes, or invoices declared in duplicate in multiple tax periods will have their deductions and refunds denied.
• Missing customs declaration for export goods: For tax refund dossiers from export activities, electronic customs declaration is a mandatory document. In case of no original, missing information or data inconsistent with the Customs system, the refund will be rejected.
• Unable to prove non-cash payment: According to Article 15 of Circular 219/2013/TT-BTC, expenses of VND 20 million or more must have payment documents via bank. Lack of statements, payment authorization or cash payment will result in the corresponding tax not being refunded.

Conclusion and recommendations

Value added tax refund is not only a legitimate right of enterprises but also an effective financial tool to help improve cash flow, optimize operating costs and enhance competitiveness.

To maximize the benefits of the tax refund policy, businesses need to note:

• Prepare transparent documents, ensure valid invoices and documents in accordance with legal regulations.

• Proactively update new guidance documents to avoid delays in processing documents or tax refund rejections due to omissions.

• Build a clear accounting and tax process, with regular reconciliation between internal books and tax declarations.

In the context of increasingly strict tax regulations and strong technology, having a specialized unit to support tax refund dossiers is a strategic choice for many businesses.

MAN – Master Accountant Network with a team of experts with many years of experience in the field of tax and accounting, is ready to accompany and support businesses from the stage of reviewing documents until receiving a successful tax refund decision.

Contact MAN – Master Accountant Network

• Address: No. 19A, Street 43, Tan Thuan Ward, Ho Chi Minh City
• Phone / Zalo: 0903 963 163 – 0903 428 622
• E-mail: man@man.net.vn

Useful reference links

• MAN full accounting service
• Circular 80/2021/TT-BTC – Ministry of Finance