FLAT LAW FIRM
Request a consultation

Foreign Investment

On-the-Spot Exports: VAT Refund Available?

8 min readFLAT LAW FIRM
Xuất khẩu tại chỗ có được hoàn thuế GTGT không?

On-the-Spot Exports: Can You Get a VAT Refund?

A Vietnamese company signs a sales contract with its parent in Singapore, but the goods never leave Vietnam — they go to another FDI company in Binh Duong for assembly. The accountant asks: is this an export? Can we apply 0% VAT and claim a refund?

The short answer: possibly, but not automatically. “On-the-spot export” is a special customs procedure with its own conditions — meet them all and the transaction enjoys export treatment; miss one link and it is treated as a domestic sale. This article maps the conditions so businesses can self-review — and flags the traps that most commonly destroy legitimate refund claims in real tax audit practice. It is part of our FDI tax compliance series.

Table of contents

1. What is an on-the-spot export?

In substance, an on-the-spot export covers goods that do not physically leave Vietnam’s territory but are treated as exports for customs purposes because the buyer is a foreign trader designating delivery to a recipient in Vietnam.

Common models:

  • Re-processing: a Vietnamese company processes goods for a foreign trader and delivers the products to another company in Vietnam as designated.
  • FDI supply chains: an overseas parent buys from a Vietnamese supplier, designating delivery to its subsidiary in Vietnam.
  • Intermediary trade: goods move between FDI enterprises domestically while owned offshore.

Customs procedures are set out in Article 86 of Circular 38/2015/TT-BTC (amended by Circular 39/2018/TT-BTC and Clause 53 of Article 1 of Circular 121/2025/TT-BTC, effective 01/02/2026 — the current on-the-spot import/export procedure, including the 15-day deadline and notification duty). Law 90/2025/QH15 added Article 47a to the Customs Law on on-the-spot import/export, effective 01/7/2025.

Why does this procedure exist at all? Because without it, the Vietnamese seller in these triangular transactions would be stuck: the goods never cross a border, so ordinary export procedures do not fit, yet the economic substance is an export — the buyer is foreign and pays from abroad. The on-the-spot mechanism bridges that gap, giving the seller export treatment (0% VAT, potential refund) while the goods stay onshore. Understanding this purpose helps explain why customs insists on the full documentary chain: the procedure is a privilege granted on the strength of paperwork, and the paperwork must prove the export substance.

2. When does it qualify as export for VAT refund?

This is the core question — and where many businesses go wrong. Not every “delivery as designated by the foreign customer” counts as an on-the-spot export. The threshold condition is completion of on-the-spot export customs procedures with a full declaration.

The framework for 0% VAT and refund consideration, in principle:

1. Contract: a sales contract with the foreign trader, providing for delivery in Vietnam to the designated recipient.

2. Customs declaration: an on-the-spot export declaration accepted by customs, with procedures completed.

3. Invoices: VAT invoices (or commercial invoices) consistent with the declaration.

4. Bank payment: the foreign trader pays through the banking system — cash or non-qualifying intermediary payments forfeit the refund right.

5. Eligible scope: goods/services eligible for 0% VAT under VAT rules.

Key principle: tax authorities assess each transaction individually. A business with 100 on-the-spot export shipments does not automatically qualify all 100 — each shipment needs a complete dossier.

For finance teams, the practical implication is process design. On-the-spot exports often involve three parties (Vietnamese seller, foreign buyer, designated Vietnamese recipient), and the documentation must tell one coherent story across all three. Build a standard dossier pack for every shipment — contract excerpt showing the delivery designation, the export declaration, the matching invoice, the bank credit advice — and reconcile the four documents before filing any refund claim. Refund audits almost always start with cross-checking these four against each other. For the procedural side of VAT refunds for FDI businesses, see VAT refunds for FDI enterprises.

3. Common ways the refund right is lost

Each of the following is drawn from real refund disputes. Note the pattern: in every case, the business believed it had an export, and the tax authority recharacterised the transaction as a domestic sale — with VAT reassessed and penalties on top.

  • No customs procedure: domestic delivery labelled “on-the-spot export” on the invoice — the tax authority treats it as a domestic sale, reassessing VAT plus penalties.
  • Non-bank payment: the foreign customer has its Vietnamese subsidiary pay in cash or on its behalf — the payment condition fails.
  • Mismatched dossiers: goods name, quantity or value differ across contract, declaration, invoice and payment evidence.
  • Wrong scope: certain goods/services are not eligible for 0% VAT even with proper procedures.

There is a recurring trap in the second bullet worth emphasising. In many FDI supply chains, the overseas parent instructs its Vietnamese subsidiary to settle the payment locally “for convenience”. From a commercial perspective nothing changes — the group still pays. From a tax perspective everything changes: the payment no longer comes from the foreign trader through the banking system, and the refund condition fails. If group treasury wants local settlement, restructure the transaction properly (e.g. a separate domestic sale) rather than dressing a domestic payment in export clothing. On the tax authority’s powers to reassess and penalise under the current tax administration framework, see Law on Tax Administration 108/2025 and its impact on FDI enterprises.

4. Self-review checklist before claiming a refund

Treat this as a gate: do not file the refund claim until every box is ticked. Tax authorities process on-the-spot export refunds with heightened scrutiny precisely because the goods never left the country — the dossier is the only proof the export is real.

1. Does the contract with the foreign trader clearly provide delivery in Vietnam?

2. Was an on-the-spot export declaration opened and completed for each shipment?

3. Do invoices match the declaration (goods, quantity, value, currency)?

4. Did funds arrive from the foreign trader’s account via bank, in the correct amount?

5. Are the goods eligible for 0% VAT?

6. Is the dossier complete and ready for a refund inspection?

Two items on this list deserve extra attention because they generate the most rejections. Item 4 (payment): the bank credit advice must show the remitter as the foreign trader named in the contract — a payment from a different group entity, even a subsidiary of the buyer, breaks the chain unless the contract expressly provides for it. Item 3 (matching): “matching” means exact consistency across all four documents, not approximate. A quantity shown in pieces on the invoice but in cartons on the declaration, without a conversion note, is the kind of discrepancy that turns a routine refund into a months-long explanation exercise.

5. Frequently asked questions

Q: What is an on-the-spot export?

A: Goods delivered inside Vietnam to a foreign trader (overseas buyer) but designated for a recipient in Vietnam — e.g. a Vietnamese company sells to its overseas parent, with goods delivered to another FDI company in Vietnam for assembly. Customs procedures follow Article 86 of Circular 38/2015/TT-BTC, as amended by Clause 53 of Article 1 of Circular 121/2025/TT-BTC (effective 01/02/2026) — the current on-the-spot import/export procedure, including the 15-day deadline and notification duty.

Q: Does on-the-spot export always qualify as export for VAT refund?

A: No. Only cases meeting all conditions on contracts, customs declarations, invoices, bank payment evidence and other requirements qualify for 0% VAT and refunds. Each transaction is assessed on its own conditions.

Q: What are the VAT refund conditions for on-the-spot exports?

A: In principle: (1) a sales contract with the foreign trader providing delivery in Vietnam; (2) a completed on-the-spot export customs declaration; (3) VAT invoices; (4) bank payment evidence; (5) goods/services eligible for 0% VAT. Missing one condition can forfeit the refund.

Q: When is a refund denied?

A: Examples: no on-the-spot export customs procedure (ordinary domestic delivery labelled “export”); cash payment instead of bank transfer; mismatched invoices and declarations; or goods not eligible for 0% VAT. These are treated as domestic sales subject to normal VAT.

Q: What about new policy developments?

A: The Customs Law has added Article 47a on on-the-spot import/export via Law 90/2025/QH15 (effective 01/7/2025). Detailed procedures are set out in Article 86 of Circular 38/2015/TT-BTC, as amended by Clause 53 of Article 1 of Circular 121/2025/TT-BTC (effective 01/02/2026) — the current implementing instrument, covering the 15-day deadline and notification duty in on-the-spot import/export procedures.

6. When to work with a tax adviser / lawyer

Work with a tax adviser for FDI enterprises when: designing transaction chains with on-the-spot elements (tripartite contracts, delivery designations); preparing VAT refund dossiers; facing a denied refund or reassessment; or updating policy under the new Article 47a of the Customs Law. A pre-transaction review is far cheaper than a post-audit defence: have counsel validate the three-party contract structure and the documentary chain before the first shipment moves, and the refund claims that follow become routine rather than contentious. FLAT Law Firm works with tax advisers to help businesses review conditions and refund dossiers — hotline 0988424851.

References

  • Circular 38/2015/TT-BTC, Article 86 (amended by Circular 39/2018/TT-BTC and Clause 53 of Article 1 of Circular 121/2025/TT-BTC, effective 01/02/2026).
  • Circular 121/2025/TT-BTC (current on-the-spot import/export procedure — 15-day deadline, notification duty).
  • Customs Law, Article 47a (added by Law 90/2025/QH15, effective 01/7/2025).
  • Cross-checked at fix (29/9/2026).