Special cases of VAT are situations that arise in business practice that businesses often encounter such as: non-taxable imports, export of services for domestic use, real estate transfers, cross-border e-commerce, or promotional invoices, gifts, etc. Correctly handling these cases according to legal regulations is a decisive factor in effective tax administration and avoiding the risk of being penalized.
According to the General Department of Taxation Report 2023, More than 7,600 billion VND of VAT has been refunded in Ho Chi Minh City., showing the clear need for declaration and handling of special cases. Therefore, understanding how to identify and account for special cases of VAT not only helps businesses manage taxes effectively, but also ensures transparency, compliance with the law and maintains reputation in the market.
VAT Overview
Value added tax (VAT) is one of the most important taxes in the Vietnamese tax system, accounting for a large proportion of the total national budget revenue. In accounting activities, VAT is not only an obligation to pay to the budget, but also a tool for cost management, determining selling prices and controlling transaction transparency. Correctly accounting for VAT, especially in special cases of VAT, helps businesses both ensure compliance with the law and optimize tax deduction and refund rights.
See more articles at: VAT Overview
What is VAT?
To understand correctly the special cases of VAT, it is necessary to first clearly understand the nature of VAT. This is a type of indirect tax, calculated on the added value of goods and services in each stage from production, circulation to final consumption.
“Value Added Tax is a tax calculated on the added value of goods and services arising in the process from production, circulation to consumption." This concept is regulated in Article 2, Law on VAT No. 48/2024/QH15.
VAT is not only a major source of revenue for the budget but also a tool for macroeconomic management. For businesses, this is a tax that needs to be accurately accounted for to ensure transparency, especially when facing complex situations in the special case of VAT.
See more articles at: What is VAT? Subjects subject to VAT in 2025 – VN Tax
Principles of VAT accounting
Before analyzing each special case of VAT in detail, business accountants need to grasp the general principles of accounting. This principle ensures that all taxes incurred are recorded promptly, accurately, and transparently.
“VAT payable, deductible, refundable or non-deductible must be reflected promptly, fully and accurately in the enterprise's accounting books.” According to Clause 1, Article 8, Circular 200/2014/TT-BTC regulations.
In reality, accounting does not stop at input and output VAT but also requires flexible handling when special cases of VAT arise such as tax exemption, non-taxation or application of tax rate 0%. Compliance with this principle helps businesses limit errors and avoid legal risks.
Special cases of VAT in practice
In the process of fulfilling tax obligations, not all transactions follow a general rule. Business reality arises very differently. special cases of VAT, from import - export, cross-border e-commerce, to real estate transfer or processing promotional invoices. Correctly identifying and accurately accounting for these cases not only helps businesses declare transparently, but also minimizes legal risks and arising costs.
Below are special situations that businesses need to pay special attention to:
Goods and services not subject to VAT
This is a group of transactions that are not subject to tax. Usually, these are areas that serve essential needs or have high social security significance, such as:
- Medical services, education - training, life insurance.
- Unprocessed agricultural and aquatic products, livestock products directly from farmers.
- Some special products and services serve national defense, security or community interests.
Many businesses often confuse “non-taxable” and “tax rate 0%”. The result is incorrect accounting, leading to no input VAT deduction. For example, an agricultural business imports machinery to produce non-taxable products. If it is incorrectly recorded as tax rate 0%, it will directly affect its tax benefits.
Goods and services subject to tax rate 0%
This is a special case of VAT that often occurs when businesses export goods, provide services to foreign organizations, or participate in humanitarian aid projects. The 0% tax rate allows businesses to not pay output VAT, while still being able to deduct input tax if they meet the conditions.
According to Article 9, VAT Law No. 48/2024/QH15:
“Tax rate 0% applies to exported goods and services, international transportation and other cases as prescribed by the Government.”
This brings a large cash flow advantage to businesses but is also an area that is easily subject to close inspection by tax authorities.
See more articles at: How are the tax rates 0%, 5%, 8% and 10% different? – MAN – Master Accountant Network
Tax exemption and reduction in special cases of VAT
Some special cases of VAT allow tax exemption or VAT reduction, typically non-refundable ODA projects, humanitarian aid programs, or transactions between diplomatic agencies. These cases often require businesses to prepare complete legal documents and confirmation from the authorities.
VAT refund in special VAT cases
VAT refund This is a sensitive issue and is often encountered by enterprises that export frequently, new investment enterprises or international organizations in duty-free zones. Tax refunds not only improve cash flow but also support the ability to reinvest. However, to receive a VAT refund, enterprises need to prove that the input tax exceeds the output tax and meet the correct conditions as prescribed.
Special projects and contracts
Large projects such as EPC (Engineering, Procurement, Construction), international cooperation or aid programs often have complex VAT mechanisms. Here, close coordination between the accounting and legal departments is the key to accurate declaration and avoiding future problems.
Invoices and documents in special cases of VAT
In addition to tax rate regulations, businesses also need to pay attention to export and handling. VAT invoice:
- Electronic invoices for export activities.
- Adjustment invoice when contract value changes.
- Invoices can be canceled or reissued when customers return or exchange goods.
- Promotional and gift invoices – it is easy to confuse “eligible expenses” and “invalid expenses”.
Errors in documentation often lead to more serious consequences than errors in tax rates, as they can lead to tax assessments, back payments and administrative fines.
| Special case group | Main content | Implications for business |
| Tax free | Goods, medical services, education, agriculture | Reduced tax liability but no input deduction |
| Tax rate 0% | Export, international transport, aid projects | Optimize cash flow, still deduct input |
| Tax exemption/reduction | ODA, diplomacy, humanitarian aid | Reduce cost burden, need confirmation documents |
| VAT refund | Exports, new investments, large projects | Fast capital recovery, cash flow support |
| Special projects | EPC, international cooperation | Require strict document processing |
| Special invoice | Export invoices, cancellation, adjustment | Avoid tax imposition, ensure transparency |
Detailed instructions on declaring and accounting for special cases of VAT
Accounting and declaring correctly for special cases of VAT not only helps businesses avoid legal risks but also optimizes benefits of tax deduction and refund. To implement effectively, businesses need to prepare complete documents and comply with standard declaration procedures according to the law.
Prepare before declaring special VAT cases
Before VAT declaration In special cases of VAT, businesses need to ensure that their records are complete and valid. This is a fundamental step to avoid the risk of being rejected or collected by the tax authorities.
The most important thing is to clearly identify the transaction: non-taxable, subject to 0% tax rate, tax exemption or tax refund eligibility. Each case will require a different set of documents, but in general, businesses need to prepare the following documents:
| Document type | Required content | Important Note |
| Valid invoice | VAT invoice or electronic invoice, clearly showing information about goods, services, and tax rates | Exported goods must be accompanied by a customs declaration to prove the transaction. |
| Economic contracts | EPC contracts, export contracts, international services… | The content must be clear, showing the payment terms and the transaction object. |
| Bank payment documents | Payment orders, statements, credit notes… | Transactions of 20 million VND or more must be paid through the bank, otherwise the right to deduction and tax refund will be lost. |
| Certificate of competent authority | Confirmation applies to ODA projects, humanitarian aid, tax exemptions and reductions... | Is a required legal document to prove that the transaction is preferential. |
Steps to declare and account for special cases of VAT
Handling VAT in special cases is always one of the most sensitive steps. If businesses comply with regulations, they will not only minimize legal risks but also maximize the right to deduct and refund taxes. On the contrary, just a small mistake in the invoicing, declaration or accounting stages can also cause businesses to be taxed or have to pay additional taxes and fines. Therefore, understanding each step of handling is a prerequisite for effective tax management.
Goods and services not subject to VAT
For goods and services that are not subject to tax, when making invoices, businesses need to clearly state the tax rate line as "not subject to VAT". Revenue generated is declared in a separate section in the 01/GTGT declaration, excluding output tax.
In accounting, revenue is still recorded as usual in account 511 or 512, but the related input VAT will not be deducted. This tax must be added directly to the production - business costs or cost of goods sold.
Goods and services subject to tax rate 0%
The application of the 0% tax rate is often encountered in export activities, international transportation or providing services abroad. When making an invoice, the enterprise clearly states the 0% tax rate and the VAT amount is 0, and declares it in a separate section on the tax declaration.
Enterprises must prepare full contracts, bank payment documents and customs declarations. In accounting, revenue is still recorded normally, but the difference is that output VAT is 0, while input VAT is deductible or refunded if conditions are met.
VAT exemption and reduction
Some special activities such as non-refundable ODA projects, humanitarian aid or diplomatic transactions are exempted or reduced from VAT. On the invoice, businesses need to clearly state the content "not subject to VAT according to regulations" to ensure legality.
When declaring, these transactions are included in the non-taxable group. In accounting, revenue is still recorded, but no output VAT will arise. Input VAT related to this activity is usually not deductible but must be included directly in expenses, unless there is specific guidance from the tax authority.
VAT refund
Tax refund is a common situation for enterprises that continuously export or are investing in new projects. On the 01/GTGT declaration, the input tax amount that has not been fully deducted will be declared at item [43], attached with the tax refund request file according to form 01/DNHT.
The tax refund dossier must include a list of invoices, bank payment documents and documents proving actual operations. In accounting, the input tax is recorded in account 133. When receiving a tax refund, the enterprise will reduce account 133 and increase cash or bank deposits.
Special projects (EPC, international aid)
Contracts or projects of a special nature such as EPC, international aid or cross-border e-commerce often have more stringent requirements. Enterprises need to separate the value of goods, services and construction to apply the correct tax rate for each part.
In the case of e-commerce, foreign suppliers must register and declare online on the General Department of Taxation's Information Portal. When accounting, businesses must clearly separate revenue and VAT, and keep full contracts, appendices and documents to serve future inspections.
Special invoices and documents
Invoices play a central role in all VAT-related transactions. Situations such as adjustments, cancellations or returns of goods need to be recorded and supplemented with invoices in accordance with regulations, then re-declared on form 01/KHBS.
In accounting, businesses will adjust revenue, cost of goods sold and output or input VAT according to each specific case. If invoices and documents are handled incorrectly, businesses may face the risk of being taxed and administratively sanctioned.
| Special cases | Documents to prepare | Accounting method | Common mistakes |
| Tax free | Invoices, contracts | Record revenue, no output tax incurred | Wrong input tax deduction |
| Tax rate 0% | Contracts, customs declarations, payment documents | Revenue 0%, reflecting qualified inputs | Missing payment documents |
| Tax exemption/reduction | Tax authority confirmation document | Recognized at preferential rates | Declaration without confirmation |
| Tax refund | Tax refund documents, bank documents | Record budget receivables | Missing documents and certificates |
| Special projects | EPC contract, aid documents | Classification by bid package | No separate items |
| Special invoice | Adjusted and canceled invoices | Record output revenue/tax | Slow or lack of adjustment |
Benefits and applications when correctly accounting for special cases of VAT
Correctly handling special cases of VAT not only helps businesses comply with the law but also brings many practical values. From optimizing costs, improving cash flow to minimizing legal risks, the benefits that businesses achieve are clearly shown in both the short and long term.
Ensuring compliance with the law
By correctly accounting for special cases of VAT, businesses avoid errors that lead to violations of regulations. This is especially important in the context of tax authorities tightening inspections and applying technology to detect irregularities in declarations. Compliance not only reduces the risk of being fined but also builds credibility and transparency in business operations.
Optimize cash flow and costs
Another important benefit of standard handling of special cases of VAT is the ability to optimize cash flow. For example, exporting enterprises applying the tax rate 0% will be able to deduct and refund input VAT, thereby improving liquidity. Conversely, if the declaration is incorrect or the documents are missing, the enterprise will have its tax refund suspended, directly affecting working capital.
Minimize accounting and tax risks
Accurately accounting for each special case of VAT helps businesses minimize risks in both internal audits and tax inspections. With transparent books, businesses can easily prove the validity of their records and avoid legal disputes. This is a core factor to maintain financial stability and protect the brand.
Improve management efficiency
A significant advantage of correctly accounting for special cases of VAT is more accurate financial data. From there, the board of directors can make better management decisions, build appropriate cost plans and investment strategies. Transparent tax data also helps businesses easily access capital from banks or investment partners thanks to increased reliability.
Conclude
VAT special cases are not only technical exceptions but also demonstrate the flexibility of the law in covering real business situations. From export activities, ODA projects to services provided to international organizations, each regulation has a direct impact on costs, cash flow and transparency in financial management of enterprises.
To handle this effectively, businesses need to proactively update new regulations, build appropriate accounting processes and store transparent records. Full compliance not only helps limit legal risks but also brings sustainable competitive advantages, especially in the context of a volatile economy and increasingly tightened tax management.
If your business wants to ensure proper compliance with special VAT cases, MAN – Master Accountant Network will be a trusted partner. With up-to-date tax expertise, modern management tools and an experienced team, MAN is committed to supporting optimal tax obligations, minimizing errors and improving financial efficiency.
Contact information:
MAN – Master Accountant Network
- Address: No. 19A, Street 43, Tan Thuan Ward, Ho Chi Minh City
- Hotline: 0903 963 163 – 0903 428 622
- Email: man@man.net.vn
