On 8 August 2023, the Ministry of Economy and Finance has recently issued No. 018 Instruction On Procedures for Applying Value Added Tax Credit and Refund to facilitate taxpayers to apply for Value Added Tax (“VAT”) credit and refund.

1. Procedure to apply for VAT credit

To apply for a VAT credit, medium or large taxpayers shall implement as follows:

1. Shall apply for VAT credit by using Online Monthly Tax Declaration Management System (E-Filling) of the General Department of Taxation (“GDT”)
2. Shall apply for VAT input credits in the month when the local supply is made, or when the goods are imported by the taxable person.
3. VAT credits are allowed only for taxable supplies or imports for the use of taxable supplies only. However, taxpayers who engage in VAT exempt activities shall not apply for VAT input credit.
4. Evidence for claiming VAT credit include:

• For purchase of domestic goods or services, taxpayers must have tax invoice (original) that follows the criteria stated in Prakas No. 723 dated 14th August 2019 on the Rules for the Use of Invoices. VAT credit is not allowed for the commercial invoice.
• For import, taxpayers must have the custom declaration and payment receipt (original) with valid name and information of the enterprise making the claim.

2. Procedure to apply for VAT refund

To ensure a quick, transparent and timely VAT refund in accordance with the Law on Financial Management, medium or large taxpayers applying for VAT refund shall implement as follows:

1. Taxpayers who have main business activity of import or is registered as Qualified Investment Projects (“QIP”) and other taxable persons who have excess VAT input credits for more than 3 consecutive months may apply for VAT refund by printing the application form via E-Filing system. To receive quick refund, taxpayers who have VAT input credit exceeding the VAT output may apply for a refund within 3 months or 6 months or 1 year by avoiding the accumulation of VAT credits for several years which increases the burden for the tax administration and takes long time to verify the invoices and related documents. In the event that taxpayers accumulate VAT input credit and do not apply for a refund for more than one year, the refund period as stated in Prakas No. 576, dated 19th June 2018, on the VAT Refund Mechanism will not apply.
2. The refund is not allowed in the event that the taxpayer accumulates the VAT input credits for more than 3 years (N-3). However, for the VAT input credit that has not been applied for refund from previous years (before 2020), taxpayers must submit an application for the refund to GDT by the end of 2023, otherwise the refund will not be granted. In addition, refunds of VAT input credit are allowed only for taxpayers who have proper supporting documents and data of associated VAT payment by the suppliers.
3. The bank account, and enterprise information shall be accurately and timely updated.
4. Documents and VAT accounting records must be adequately and timely provided in accordance with requirements of GDT; otherwise, the VAT refund request will be suspended or denied until GDT receives the requested documents and records.
5. The GDT may suspend the VAT refund temporarily in case that any VAT refund applicant has tax debt or been subject to tax reassessment, until the enterprise settles the tax debt or resolve the tax reassessment.