Proper process of Input VAT deduction in Vietnam 2023

Input VAT deduction is one of the most concern of foreign invertors once spending money into Vietnam. There are a lot of questions regarding to VAT deduction:

– What is a tax deduction?

– What is Vietnamese regulations about VAT deduction?

– How to get VAT deducted in Vietnam?

Below TTL logistics’ article will give you instruction about VAT deduction in Vietnam.

What is VAT deduction ?

Value-added tax (VAT) deduction is a form of determining the amount of tax to be paid into the Nation budget for taxable products.

Simply, when a company buys a product, it will have to pay VAT for that product, which will be considered as input VAT. But when the business proceeds to sell that product to a buyer, this person will have to bear the VAT calculated on the value of that product, also known as output VAT.
At that time, the VAT that the company has to pay will be = Output VAT – Input VAT

How to get VAT deduction in Vietnam?

A company (Both local and  FDI) that wants input VAT deducted must meet the following conditions:

– There is a VAT invoice of purchased goods and services.
– There are bank remittances for purchasing
– For exported goods and services, in addition to the above two conditions, it is also necessary to have a contract for the sale and processing of exported goods with documents of payment for goods through a bank.

When companies need VAT refund?

Sometimes, companies in Vietnam need to do VAT refunds (returns). There are some cases that this process needed:

1. Tax refund for exported goods and services

– List of invoices and documents for purchased goods and services

– List of customs declarations that have been cleared

2. Tax refund for programs and projects using official development assistance (ODA) funds

3. Tax refund for investment projects

– Copy of Investment Registration Certificate/Investment Certificate/Investment License in case the procedures for issuance of an Investment Registration Certificate are required

– Copy of Charter capital contribution document

– List of invoices and vouchers for purchased goods and services

Vietnam regulations on VAT for FDI companies

For FDI business: The VAT amount will be 100% the same as that of businesses in Vietnam if they are focused on Vietnam’s local market. This is detailed in the tax law. If a foreign investor opens a business in Vietnam with the goal of Exporting goods to foreign countries (mainly exporting to the investing country), it will need to pay attention to some of the following information:

– The business is EPE-Enterprise Processing Export or not

– If the business is EPE, the company is not subject to VAT declaration. And it is not necessary for VAT refund or deduction

For more details or advice once investing into Vietnam, please contact TTL logistics for support:

TL Global Logistics

Address: Number 82, Duy Tan Street, Cau Giay Dist, Hanoi City

Hotline sales: (+84) (0) 979 059 193 

Email: sales@mlc-ttl.com