What are VAT Refunds?
Quick Summary of VAT in Vietnam
In Vietnam, VAT is regulated by Vietnam’s Law on Value-Added Tax. Your company’s accountants or an accounting outsourcing firm will finish, declare, and submit the tax to the local tax authorities. The direct approach (for extremely specialized industries like processing gold and gemstones) and the indirect (credit) technique are the 2 ways to figure out how much VAT a business must pay the government. The indirect method, which is more fully detailed in Circular 219/2013/TT-BTC, is used by the majority of businesses.
The consumer of a company’s goods and services is subject to output VAT, which is typically applied to the cost of those goods and services on customers’ receipts. When a business purchases goods, equipment, or services from suppliers, input VAT is levied against the business itself. As your organization is not the final consumer of these materials, input VAT must be subtracted from your payment amount to indicate that they are not subject to VAT.
Definition of VAT Refunds
The amount of VAT that is, in some circumstances, refunded to the taxpayer from the state budget is referred to as a VAT refund. For instance, the business may have overpaid for its VAT, or the government may be offering returns as a tax break.
Who are eligible? What are the requirements for VAT refunds?
When your business’s total input VAT for a year (12 months or 4 quarters) has not been completely subtracted from its output VAT, VAT refunds are granted. In other words, your business overpaid the annual VAT sum because it failed to account for all of its input VAT deductions.
Only businesses who employ the credit method for filing VAT will be involved in this program because reimbursements are based on input and output VAT. Moreover, there must be no lingering tax debt of any kind.
Additionally, VAT refunds are also used by the Vietnamese government as a tax incentive in some cases. Here are some examples of eligible cases (not limited to the examples below) according to Circular 130/2016/TT-BTC:
- Registered oil and gas exploitation businesses with an investment duration of more than 12 months; while having a total accumulated VAT amount of goods and services purchased and used for investment of VND 300 million (USD 12,600) or above
- Ownership transfer, enterprise transformation, M&A, consolidation, division, separation, dissolution, bankruptcy, or termination of operation within businesses if there is overpaid VAT or input VAT has been fully deducted
- Businesses that file over VND 300 million (USD 12,600) in uncredited input VAT in exported goods and services.
After completing the aforementioned procedures, you must ensure that your business has the required documentation in order to claim for a VAT refund. That contains:
- Investment Registration Certificate (IRC) and Enterprise Registration Certificate (ERC, also known as Business Registration Certificate or BRC)
- A company stamp, as regulated by the Law on Enterprises
- Accounting documents, including financial statements
- A company bank account for your investment capital (which has to match your IRC)
- A correctly filed refund application
How do I apply for a VAT refund?
Applications for tax refunds are processed through the government’s online tax management system. The fact that it is only available in Vietnamese, however, is a significant issue.
Additionally, some businesses, such as those with importing activities and new investment projects, must follow more particular procedures.
How do I make it easier?
Outsourcing complex business procedures that you don’t have enough resources for is the answer to many firms’ challenges, especially when starting out or entering a new market. They include accounting and tax compliance, legal (legal representation and secretarial services), and human resources (payroll and recruitment).
Our comprehensive business process outsourcing (BPO) services in Vietnam, which take care of all your corporate outsourcing needs, now include VAT return application.
How do we get your company’s VAT refunds?
First, we’ll conduct a full assessment of your tax refund eligibility to decide whether we can go through with the service. That means we’ll:
- Collect all the relevant information and documents of your company
- Conduct a thorough compliance check
- Consult the conditions of the VAT refund.
We’ll also liaise with your company’s local authorities to confirm the requirements for your specific business type and field.
If all conditions are met on both your company’s side and the officials’ side, we’ll move on with preparing your application and submitting it.
- We’ll do all the research and legal inspection on procedures specific to your company.
- We’ll prepare your company’s dossiers and submit them for you.
- We’ll talk with the authorities and settle any complications regarding your application.
- We’ll transfer your results back to you as soon as they’re available.
What you’ll receive after the application
We’ll make sure you’re prepared as if you went through the procedures yourself as soon as they’ve been completed. That contains:
- Confirmation documents directly from the Tax Department for the refund
- The refunded amount of your VAT.
Want to find out more about our service? Contact one of our business consultants now.
Warren B VAT refunds service will provide you with useful information about tax refunds in Vietnam regarding locations of paying tax, procedures of a tax refund, and necessary documents with 100% Success Guaranteed!