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While building the factory and importing machinery, an FDI company spends heavily but has no revenue yet, so input VAT builds up into a significant sum. A VAT refund for an investment project lets you recover this cash, provided the file is clean from the very first document. ACCA Consulting Vietnam summarizes the preparation process and the mistakes that most often send a file into a pre-refund inspection.
1. When is a new investment project considered for a VAT refund?
In principle, a new investment project still in the investment phase and not yet operating may be considered for a refund if it has input value-added tax (VAT/GTGT) that has not been fully credited. The specific conditions (tax amount thresholds, excluded sectors, capital contribution conditions, licences for conditional business lines, etc.) change from period to period, so check the current regulations before preparing the file.
For FDI companies, the tax authority usually scrutinizes three points:
- Capital actually contributed on time: capital must be transferred through the direct investment capital account (DICA) and contributed within 90 days of the Enterprise Registration Certificate (ERC) issue date. Under-contribution or late contribution is a major weakness in the file.
- Non-cash payment: invoices of VND 5 million or more (VAT inclusive) must be paid through a bank for the input VAT to be creditable.
- Input VAT genuinely serves the project: invoices must show the company's correct name, address and tax code; goods and services must relate to the investment items.
2. Tracking input VAT during construction
A common mistake is waiting until you are ready to file before gathering documents. Open a separate project tracker from the first month, broken down by item: construction, imported machinery, locally purchased equipment, consulting services. Each line should reference the invoice number, payment voucher, contract and acceptance minutes.
Illustrative example in VND million, not actual data. Input VAT rises sharply during construction and machinery imports.
View as table
| Q1 | 180 million VND |
| Q2 | 520 million VND |
| Q3 | 1,150 million VND |
| Q4 | 1,760 million VND |
| Q5 | 2,100 million VND |
A cumulative chart makes it easy for management to see how much money is "waiting" with the state budget and to time the filing to fit the cash flow plan.
3. What does a VAT refund file for an investment project contain?
The official forms are prescribed by the tax authority and may change. In addition to the refund request on the prescribed form, the company should have the following supporting documents ready so it can respond quickly when asked:
| Document group | Examples | Notes |
|---|---|---|
| Project legal documents | IRC, ERC, investment decision | Latest version after any amendments |
| Capital contribution | DICA statements, capital transfer documents | Consistent with contribution within 90 days |
| Input invoices | Invoice listing by period | Cross-checked against the e-invoice lookup portal |
| Payments | Payment orders, bank statements | Invoices of VND 5 million or more must be paid by bank transfer |
| Contracts | Construction, machinery purchase and consulting contracts | With acceptance and handover minutes |
| Imports | Customs declarations, import VAT payment documents | Consistent with the machinery list |
- 1Review eligibility
Check that the project qualifies for a refund and is not in an excluded category.
- 2Reconcile returns
The amount claimed matches the VAT returns for each period and does not duplicate amounts already credited.
- 3Clean up invoices
Remove invoices with incorrect details, paid in cash or not serving the project.
- 4Build the evidence pack
Organize documents according to the listing so each line can be traced quickly.
- 5File and follow up
File electronically, monitor notices and respond to requests for explanation on time.
4. Mistakes that send the file to a pre-refund inspection
- Capital not fully contributed or contributed late: using loans from the parent company instead of contributed capital without properly completing the foreign loan procedures.
- Invoices from the pre-incorporation stage: costs paid by the investor before the ERC was issued, but the invoices are not in the company's name.
- Offsetting or third-party payments without documentation: the parent company pays the contractor on the company's behalf without a tripartite agreement.
- Mixing project costs with operating costs: when the project already has some revenue but input VAT is not separated.
- Risky suppliers: the seller has ceased operating or abandoned its business address.
- Discrepancies between returns and the books: returns amended several times without explanation.
5. Practical tips for FDI project accountants
- Download and reconcile input e-invoices on the lookup portal within the first 5 days of the month
- Tag each invoice with a project item code in the accounting software
- Check the operating status of new suppliers
- Store contracts and acceptance minutes in the same folder as the invoices
- Update the capital contribution schedule and DICA statements
FAQ
Can a project that already has some revenue still get an investment VAT refund?
It depends on whether the project has officially commenced operations and how input VAT is separated. This situation easily leads to disputes, so review it carefully with a specialist before filing.
If we do not claim a refund, is the input VAT lost?
No. The company can carry it forward to offset against output VAT once it has revenue. A refund simply recovers the cash sooner.
Do invoices issued before the ERC count?
Pre-incorporation costs require valid documents and a legal basis for transferring them to the company. Invoices not in the company's name are usually difficult to accept for crediting or refund.
Clean up your input VAT file before claiming a refund
ACCA Consulting Vietnam provides accounting services in Ho Chi Minh City for FDI projects, tracking input VAT by item from day one. Get advice.
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