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Value Added Tax Refund for foreign contractor

Under Vietnam Law, only when foreign contactor (FC) selects the option of Paying Value Added Tax according to declared revenue and expense and
 is classified to one of following cases as stipulated at the Article 8 of The Circular No. 219/2013/TT-BTC dated 31 December 2013 of the Ministry of Finance guiding the implementation of the law on value added tax and the Decree No. 209/2013/ND-CP dated December 18, 2013 of the Government on detailing and guiding implementation of several articles of law on value added tax:
  • If input VAT is not completely deducted in the month (if tax is declared monthly) or in the quarter (if tax is declared quarterly), the taxpayer that pays VAT using credit-invoice method may deduct it from the tax incurred in the next period. If input VAT is not completely deducted after 12 months or 4 quarters from the first month or quarter input VAT is incurred;
  • In the month (if tax is declared monthly) or in the quarter (if tax is declared quarterly), if input VAT on exported goods and services that remains after deduction is VND 300 million or above, VAT shall be refunded; if the input VAT is below VND 300 million, it shall be aggregated with that in the next month or quarter. Then, in the month or quarter, the taxpayer may receive a refund of VAT on exported goods/services if the input VAT that remains after being offset against VAT on goods/services sold domestically is VND 300 million or above;
  • When a company is transferred, converted, merged, amalgamated, divided, split, dissolved, bankrupt, or shut down, it will receive a refund of paid VAT or input VAT remains after deduction. If the business establishment that has not been in operation is dissolved and does not incur output VAT on the primary business according to the project of investment, no VAT refund shall be made. If the business establishment has received such refund, it must be returned to government budget.
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