For exporters, VAT deduction and VAT refund are not two options to choose between — they are two sequential mechanisms: deduct first, and only the remaining uncredited input VAT may be refunded. Misunderstanding this relationship is a common reason refund applications get rejected.
1. VAT deduction: the mandatory first step
Under Article 14 of the Value Added Tax Law 48/2024/QH15 (effective 01/7/2025), businesses may deduct input VAT when all conditions are met:
- A valid VAT invoice for purchased goods or services (or proof of VAT paid at import);
- Non-cash payment proof for purchases valued at VND 5 million or more (VAT inclusive) — the threshold lowered from VND 20 million to VND 5 million from 01/7/2025;
- For exported goods and services, additionally: a contract with the foreign party; sales invoices; non-cash payment proof; customs declarations; packing lists, bills of lading, insurance documents (if any).
VAT payable equals output VAT minus deductible input VAT. Uncredited input VAT carries forward to the next period — and only the balance remaining after deduction moves to the refund mechanism.
2. VAT refund: when can exporters claim it?
Under Article 15 of Law 48/2024/QH15, an exporter qualifies for a refund when:
- Uncredited input VAT on exported goods and services is VND 300 million or more;
- The refund is capped at 10% of export revenue from goods and services.
In other words, the refund is the final release valve for input VAT that an exporter cannot absorb through periodic deductions — fitting, since exports are taxed at 0% and generate almost no output VAT to offset against.
3. Notable update: one condition removed
Law 149/2025/QH15 (Law amending and supplementing a number of articles of the Law on Value-Added Tax; Clause 3 Article 1; effective 01/01/2026) has removed the condition that “the seller must have declared and paid tax” from refund dossiers. Previously, exporters could suffer for a supplier non-compliance; that barrier is now gone, reducing risks beyond the control of compliant businesses.
4. Two common traps
- Wrong legal basis: Article 13 of Law 48/2024 lists prohibited acts — a prohibitive provision that must never be cited as the basis for a refund claim. Dossiers invoking Article 13 will be rejected outright.
- Wrong citation: when consulting guiding documents, verify the correct reference is Article 9 of Circular 69/2025/TT-BTC (not “Article 7” as misquoted in some materials). Always check numbering against the original text before citing.
5. Procedure at a glance
Businesses file periodic VAT returns, deducting input VAT under Article 14; uncredited balances carry forward. When refund conditions are met (VND 300 million or more, within the 10% of export revenue cap), the business submits a refund dossier to the tax authority. The authority reviews the dossier — auditing before or after the refund depending on risk classification — then issues the refund decision.
Frequently asked questions
Can an exporter choose a refund instead of deduction?
No. The two mechanisms are sequential: deduction first, and only the remaining uncredited amount may be refunded.
Is a VND 6 million cash-paid invoice deductible?
No. From 01/7/2025, purchases of VND 5 million or more (VAT inclusive) require non-cash payment proof to be deductible.
Can a refund be denied because the supplier failed to declare tax?
Under Law 149/2025/QH15 (Law amending and supplementing a number of articles of the Law on Value-Added Tax; Clause 3 Article 1; effective 01/01/2026), the “seller declared and paid tax” condition has been removed, so it is no longer grounds for denial.
Legal basis: Value Added Tax Law 48/2024/QH15 (Art. 13 (prohibitive provision — not a basis for tax refund), 14, 15; effective 01/7/2025); Law 149/2025/QH15 (Law amending and supplementing a number of articles of the Law on Value-Added Tax; Clause 3 Article 1; effective 01/01/2026 — removing the seller-declared-and-paid condition).
Is your exporting business looking to optimize VAT deduction and refunds? Reach out via the contact page of FLAT Law Firm for dossier support.
For general information only; not legal advice.
The legal content of this article was reviewed by the AI Legal Council of FLAT and submitted to the owner for approval; it is not the opinion of a human lawyer and does not replace legal advice for specific cases.