New Regulations on VAT Refunds for Exported Goods Effective from July 1, 2025

From July 1, 2025, the value-added tax (VAT) refund policy for export activities in Vietnam will be officially adjusted pursuant to Decree No. 181/2025/ND-CP. These changes have a direct impact on cash flow, tax accounting, and VAT refund entitlements of exporting enterprises. How should businesses correctly understand and apply these new rules to avoid having their VAT refund applications rejected?

VAT Refund Regulations for Exported Goods and Services under Decree 181

Decree No. 181/2025/ND-CP clarifies the cases in which VAT refunds apply to export activities, while also setting out limitations and principles for determining refundable VAT amounts.

Conditions on Input VAT Amounts Eligible for Refund

Enterprises that generate exported goods or services in a month or quarter may be eligible for VAT refunds if:

• The remaining input VAT that has not yet been fully credited reaches VND 300 million or more;

• VAT refunds are processed on a monthly or quarterly basis, depending on the tax declaration period.

Important note:
VAT refunds do not apply to goods that are imported and then re-exported in their original form, except for imported goods used as raw materials for the production or processing of exported products.

Proper Identification of Eligible Taxpayers in Specific Export Scenarios

Decree 181 specifies the eligible VAT refund recipients for different export models, including:

• Entrusted exports: the enterprise owning the goods entrusted for export;

• Subcontracted processing: enterprises signing export processing contracts with foreign partners;

• Exports for overseas construction projects: enterprises directly exporting goods for construction works abroad.

Imported goods subsequently exported refer only to goods imported into Vietnam and then exported, excluding imported raw materials used for manufacturing exported products.

Determining VAT Refunds When Enterprises Have Both Export and Domestic Sales

In practice, many enterprises engage in both export and domestic sales. Decree 181 provides strict rules on allocating input VAT in such cases.

Principles for Accounting and Allocation of Input VAT

• Enterprises must separately account for input VAT used for export activities;

• If separate accounting is not feasible, input VAT is determined based on the ratio of export revenue to total taxable revenue of the refund period.

The refund period is calculated continuously from the tax period in which uncredited input VAT arises until the period in which the refund application is submitted.

Limits on VAT Refund Amounts for Export Activities

After offsetting against VAT payable for domestic sales:

• If the remaining input VAT is VND 300 million or more, the enterprise qualifies for a refund;

• The refundable VAT amount must not exceed 10% of export revenue for the refund period.

Any excess input VAT beyond the 10% cap will be carried forward to subsequent tax periods for further crediting and refund determination.

Mandatory Conditions for VAT Refunds from July 1, 2025

In addition to determining refundable VAT amounts, enterprises must fully meet the conditions stipulated in Article 37 of Decree 181/2025/ND-CP.

Conditions on Tax Declaration Method and Accounting Records

Enterprises applying for VAT refunds must:

• Apply the credit method for VAT calculation;

• Maintain complete accounting books and accounting documents in accordance with regulations;

• Have a bank account registered under the enterprise’s tax identification number.

Enterprises must also meet input VAT credit conditions and must not fall under cases excluded from VAT refunds as prescribed by Decree 181.

Conditions Related to Sellers of Goods and Services

A notable new requirement is that tax compliance by sellers directly affects the buyer’s VAT refund eligibility:

• At the time of submitting a VAT refund application, sellers must have declared and paid VAT in full, with no outstanding VAT liabilities for the relevant tax period;

• Tax authorities will conduct automatic verification via information technology systems;

• If sellers fail to submit VAT declarations or still owe VAT, buyers will not be entitled to VAT refunds for the corresponding invoices.

Requirements for VAT Refund Dossiers and Procedures

When submitting a VAT refund application, enterprises must:

• Have sufficient eligible input VAT amounts;

• Comply with tax declaration regulations and prepare refund dossiers appropriate to each refund case;

• Submit dossiers to the competent tax authority for classification as either refund-first inspection-later or inspection-first refund-later cases.

VAT refund dossiers will be processed in accordance with tax administration laws.

Exporting enterprises preparing VAT refund applications from July 1, 2025 should exercise particular caution, as even minor errors in invoices, counterparties, or VAT allocation methods may result in delayed processing or rejection of refund claims.

If you require assistance with reviewing VAT refund dossiers, tax strategy consulting, or working with tax authorities, DEDICA Law is ready to support you and safeguard your interests in a safe and efficient manner.

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