Value-Added Tax (Vat) Refund: Conditions, Procedures, And Key Risks Businesses Need To Manage

A value-added tax (VAT refund) is an important mechanism that helps businesses recover eligible input VAT, improve cash flow, and ease working capital pressures. However, not every case in which input VAT exceeds output VAT or remains uncredited qualifies for a refund. Correctly identifying the applicable refund category, substantiating the actual nature of transactions, and ensuring consistency across tax filings are essential to securing a VAT refund and managing subsequent risks.

1. Four Key Categories of VAT Refunds Businesses Need to Identify Correctly

Under the Law on Value-Added Tax No. 48/2024/QH15 and relevant amending, supplementing, and guiding regulations, VAT refund eligibility is determined on a case-by-case basis. The main categories businesses may need to consider include:

• Exports of goods and services: VAT refunds depend on the applicable conditions for export activities, transaction records, payment documentation, and other relevant requirements, including those for on-the-spot exports where applicable.
• Investment projects: Projects must fall within an eligible refund category and satisfy the relevant conditions concerning investment status, uncredited input VAT, and other applicable legal requirements.
• Goods and services subject to the 5% VAT rate: Business establishments exclusively engaged in producing goods or providing services subject to the 5% VAT rate may qualify for refunds if they meet the applicable requirements concerning uncredited input VAT and the relevant period.
• Other special cases: These may include certain cases involving dissolution, bankruptcy, projects funded by non-refundable official development assistance (ODA), or other specific refund mechanisms provided by law.

Each category has its own rules for determining refundable amounts and documentation requirements. Therefore, uncredited input VAT does not automatically qualify for a refund. Businesses need to identify the applicable conditions and determine the portion of input VAT that is actually eligible for refund.

2. Key Factors Affecting VAT Refund Eligibility

Applying the Right Refund Conditions to Actual Business Activities

A complete dossier does not necessarily satisfy VAT refund requirements if the business identifies the wrong refund category or fails to meet the relevant conditions. For investment projects, export activities, or businesses dealing in multiple categories of goods and services, applying the wrong rules may directly affect the scope and amount of the refund claim.

Valid Invoices Alone Do Not Prove a Genuine Transaction

A VAT invoice is an essential part of the refund dossier, but its formal validity alone does not prove that the underlying transaction actually took place. Contracts, delivery records, acceptance documents, customs dossiers, and payment evidence should consistently reflect the substance of the transaction. For special payment arrangements, such as debt offsetting or third-party payments, the dossier should satisfy the applicable conditions and provide evidence of the related payment flows.

Determining the True Nature of Input VAT

The amount of tax stated on an invoice does not automatically qualify for a refund. Input VAT must be assessed against the applicable deduction conditions, its connection with refund-eligible activities, the allocation of shared input VAT, and amounts previously deducted, offset, or adjusted in earlier tax periods. For businesses with multiple business activities, an allocation method that lacks a sound basis may result in an inaccurate refund claim.

Maintaining Consistency Across Tax Periods

Discrepancies between tax returns, accounting records, and supporting documents may require businesses to provide explanations or amend their dossiers. Changes such as sales returns, revenue adjustments, or previously refunded amounts subsequently found to be ineligible should be assessed under the applicable regulations, rather than being addressed solely within the latest reporting period.

3. Risks That May Lead to Further Review of VAT Refund Dossiers

Transactions That Are Not Adequately Substantiated

A dossier containing invoices but lacking acceptance records, transportation documents, or evidence that goods or services were actually supplied may raise questions about the substance of the transactions. The risk is more significant when a business engages multiple subcontractors or operates through a complex supply chain in which supporting documents cannot be clearly linked across the parties involved.

Suppliers Showing Warning Signs

Suppliers that have ceased operations, vacated their registered business addresses, or present invoice-related risk indicators warrant careful assessment. Decree No. 359/2025/NĐ-CP removed the requirement linking the buyer’s VAT refund eligibility to the seller’s declaration and payment of VAT on the invoice issued to the refund claimant. However, this does not mean that every invoice automatically qualifies for input VAT deduction or refund. The legality and substance of the transaction, together with the relevant supporting documents, must still be assessed under the applicable regulations.

Unsupported Allocation of Shared Input VAT

Where office expenses, management costs, warehousing, or advisory services support multiple business activities, businesses need an appropriate basis for identifying the portion of input VAT attributable to refund-eligible activities. If the allocation method does not reflect the nature of the expenses or lacks supporting evidence, the amount claimed for refund may be adjusted.

Inconsistencies in Export Documentation

Export documentation should not only support reported revenue but also be consistent with the movement of goods, input costs, and payment flows. Discrepancies in quantities, material consumption norms, logistics documents, or payment arrangements may require businesses to provide additional evidence to clarify the transactions.

Incorrect Application of Regulations or Effective Dates

When tax policies change, applying outdated rules or overlooking transitional provisions may affect tax filings and the calculation of refundable VAT. For dossiers spanning multiple tax periods, businesses need to distinguish the rules applicable to the relevant transactions, filing periods, and refund procedures.

4. VAT Refund Risks Do Not End When the Money Is Received

The processing timeline depends on whether the dossier falls under the refund-first, audit-later or audit-first, refund-later procedure, as prescribed by law. However, receiving a VAT refund does not mean that all related risks have been eliminated.

During subsequent tax inspections or audits, the tax authorities may review previously refunded claims in accordance with the applicable regulations. If an amount already refunded is found to be ineligible, the business may be required to repay the amount, together with late-payment interest and administrative penalties where the relevant legal grounds apply.

This risk is particularly important for businesses that have already used the refunded amount to pay suppliers, finance investments, or support working capital. Funds previously recorded as a cash inflow may become an unexpected financial liability.

A review before submission therefore serves not only to reduce requests for supplementary documents and explanations during processing, but also to help businesses assess how well their refund claims can be substantiated in a subsequent review. Supporting records should be complete, retrievable, and consistent across tax data, accounting records, invoices, and transaction documents throughout the applicable period during which the dossier may be subject to inspection under the law.

5. Key Regulations to Consider When Determining VAT Refund Eligibility

Businesses should review the relevant legal instruments in light of their scope, effective dates, and transitional provisions. These include:

• Law on Value-Added Tax No. 48/2024/QH15 and relevant amending and supplementing legislation.
• Law No. 149/2025/QH15 and Law No. 90/2025/QH15, to the extent that their provisions are relevant to the matter.
• Decree No. 181/2025/NĐ-CP, together with amending and supplementing instruments, including Decree No. 359/2025/NĐ-CP and Decree No. 144/2026/NĐ-CP.
• Circular No. 69/2025/TT-BTC and other relevant guidance on determining refundable VAT amounts.
• Law on Tax Administration No. 108/2025/QH15, effective July 1, 2026, together with relevant guidance on tax administration procedures applicable at the time the refund procedure is carried out.

For dossiers covering multiple tax periods, businesses need to identify the regulations applicable to each transaction, filing period, and refund procedure. Policy updates should be assessed by reference to the full text and effective status of the relevant provisions, rather than summaries or general announcements of policy changes alone.

Disclaimer: VAT refund eligibility, refundable amounts, and processing timelines depend on the facts and supporting documentation of each case and the regulations applicable at the time of assessment. VAT refund approval falls within the statutory authority of the tax authorities.