VAT Refund Vietnam for Foreigners: A Comprehensive Guide to Maximizing Tax Relief
22/10/2024
Navigating Vietnam’s tax system, particularly VAT refunds, can be overwhelming for foreign business owners and travelers alike. However, understanding the intricacies of this process is crucial for ensuring you don’t miss out on significant savings. Whether you’re a foreign entrepreneur investing in the country or simply a tourist looking to reclaim taxes on purchases, this guide will take you through every step of how to claim VAT refunds and optimize your tax relief in Vietnam.
What is VAT in Vietnam?
Value-Added Tax (VAT) in Vietnam is imposed on most goods and services at a standard rate of 10%. However, to support businesses recovering from the COVID-19 pandemic, the government temporarily reduced the VAT rate to 8% in 2022, with this reduction extended until December 2024.
For foreign businesses and travelers, understanding VAT is essential. For business owners, VAT must be managed through a process of input and output VAT declarations, while foreign travelers can claim VAT refunds on purchases made within the country before departure. Companies providing payroll outsourcing services in Vietnam or other international services should ensure they manage their VAT processes efficiently.
Who is Eligible for VAT Refunds in Vietnam?
In Vietnam, two key groups are eligible for VAT refunds:
Foreign Travelers:
- You must have made eligible purchases from VAT refund stores.
- Goods must be unused and carried out of Vietnam within 60 days of purchase.
- You must have the appropriate documentation, such as a VAT invoice, passport, and boarding pass.
Foreign Businesses:
- Companies using the credit method of VAT calculation (i.e., accounting for both input and output VAT) may claim VAT refunds if they overpay VAT or have unclaimed input VAT.
- Refunds are applicable in cases like company mergers, investment projects, or during the export of goods and services where uncredited VAT exceeds VND 300 million (approximately US$12,600).
VAT Refund Process for Foreign Travelers
Claiming a VAT refund as a traveler is a straightforward process if you follow the correct steps:
Step 1: Shop at VAT Refund Eligible Stores
Ensure you shop at stores displaying the “VAT refund” logo. After making your purchase, ask for a VAT invoice, which will serve as your tax declaration when claiming your refund.
Step 2: Gather Necessary Documentation
Before heading to the airport, make sure you have:
- Your passport
- Your VAT refund invoice
- Your boarding pass
- Unused goods purchased in Vietnam
Pack the goods separately for easy customs inspection at the airport.
Step 3: Visit the VAT Refund Counter at the Airport
At the airport, head to the VAT Refund Customs Inspection Office with your documentation. Customs officials will inspect your purchased goods and validate your claim. You’ll then proceed to the tax refund desk.
Step 4: Receive Your Refund
Upon completing the customs inspection, you will be issued your VAT refund in Vietnamese Dong (VND), minus a small processing fee (up to 15%). You can convert the VND to your preferred currency at the airport’s exchange centers (e.g., Vietcombank, Maritime Bank, or BIDV at Noi Bai or Tan Son Nhat airports).
VAT Refund Process for Businesses in Vietnam
Foreign companies operating in Vietnam can benefit from VAT refunds in various scenarios where input VAT exceeds output VAT, such as investment projects, mergers, or exports. For example, businesses engaged in staffing services in Vietnam or outsourcing services may find themselves eligible for VAT refunds, particularly in sectors like investment projects or exporting goods.
Key Situations for VAT Refund Eligibility:
- Exporting Goods and Services: Companies with over VND 300 million in uncredited input VAT on exported goods/services may apply for a refund. This is relevant for businesses engaged in manufacturing and export operations.
- Investment Projects: Registered foreign companies with significant input VAT during investment phases can claim refunds, especially for large infrastructure, oil, or gas projects.
- Company Reorganization: Mergers, acquisitions, or business restructurings (such as M&A activities) may also lead to VAT refunds on uncredited input VAT.
Steps for Businesses to Claim VAT Refunds:
- Prepare Your Documentation:
- Investment Registration Certificate (IRC)
- Enterprise Registration Certificate (ERC)
- Official accounting documents and financial statements
- Proof of the bank account used for investment activities
- Refund application form
- Submit Your Application: VAT refund applications must be submitted via the government’s online tax management platform. This process requires detailed documentation, particularly for businesses involved in exports or investments.
- Compliance Checks: Local tax authorities will thoroughly check your financial records and invoices. Ensure all accounting statements are accurate before submitting your application. For complex cases, such as staffing firms in Vietnam or large-scale investment projects, outsourcing the process to tax professionals may be advisable.
Common Mistakes to Avoid When Claiming VAT Refunds
- Missing Documentation: Always ensure you have the required invoices and documents for your claim.
- Unclaimed Input VAT: Regularly check for unclaimed input VAT that can be refunded or deducted.
- Not Outsourcing Complex Cases: For businesses dealing with investments, exports, or M&A activities, consulting experts like NIC Global can streamline the process and increase the chances of a successful refund.
Impact of VAT Reductions on Businesses in Vietnam
Vietnam’s government extended the VAT reduction from 10% to 8% until the end of 2024. This VAT cut offers financial relief to companies in industries such as manufacturing and services. For businesses using the credit method to calculate VAT, the refund process ensures that input VAT is deducted accurately from output VAT, reducing operational costs and improving profitability.
Outsourcing VAT Refund Processes to Experts
Navigating VAT refunds can be complex, especially for foreign businesses unfamiliar with Vietnamese tax laws. This is where outsourcing can be a game-changer. By partnering with tax professionals like NIC Global, businesses can ensure compliance, expedite the refund process, and reduce administrative burdens.
NIC Global offers a comprehensive range of services, including:
- Tax consultancy and compliance checks
- Assistance with preparing and submitting refund applications
- Liaising with local tax authorities
- Support throughout the refund process, from documentation to fund disbursement
Conclusion: Claiming Your VAT Refund Efficiently
Whether you’re a foreign traveler or an international business, claiming VAT refunds in Vietnam can significantly boost your financial efficiency. By following the steps outlined above and leveraging expert services, you can ensure that your refund process is smooth and timely.
Ready to simplify your VAT refund process?
Contact NIC Global today for expert tax support and consultancy services to maximize your VAT refund
For contact and support:
Facebook: NIC Global – Human Resource Solutions
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Website: www.nicvn.com
Email: [email protected]
Hotline: 0981.23.43.76
Address:
- Hanoi Office: No. 3A Thi Sach, Pham Dinh Ho Ward, Hai Ba Trung District, Hanoi, Vietnam
- Ho Chi Minh City Office: Dakao Center Building, 35 Mac Dinh Chi, District 1, Ho Chi Minh City, Vietnam
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