VAT refunds for investment projects are paid to companies before the project becomes operational; when the project is never implemented as committed, the tax authority may issue a clawback decision — recovering the refunded tax plus a misdeclaration fine and late-payment interest. This article maps when clawback applies, the exact exposure, and the lawful exits.
When a VAT refund already received is clawed back
The current framework is the Law on Value-Added Tax 48/2024/QH15 (effective 01/01/2026): Article 15 sets a minimum refund threshold of VND 300 million for investment-project refunds. The refunded amount is input VAT on goods and services purchased to implement a new investment project that is still in the investment phase and not yet operational. When the project is never implemented — no investment made, the project transferred, or purchased goods diverted to other purposes — the basis of the refund disappears, and the tax authority issues a recovery decision under the Law on Tax Administration 108/2025/QH15.
In practice the authority detects this through data cross-checks: project progress against the investment registration certificate, input invoices already claimed for refund, and financial statements showing no activity. Companies should self-review as soon as a project risks stalling: the longer the refunded tax is held after the project stops, the more the 0.03%-per-day late-payment interest accumulates.
The exposure: full repayment + 20% fine + daily interest
The clawback decision requires repayment of the entire refunded VAT amount for which the company no longer qualifies. On top of the principal, two additional charges apply. On fines: misdeclaration causing a tax shortfall or an inflated refund is fined at 20% of the understated tax or the excess refunded amount under Article 16 of Decree 125/2020/ND-CP. This is the administrative fine when the authority concludes misdeclaration occurred — distinct from fraud cases handled under the tax-evasion frame.
Late-payment interest runs at 0.03% per day on the late amount, under point a, clause 2, Article 16 of the Law on Tax Administration 108/2025/QH15, from the day after the payment deadline until actual payment into the state budget. For large clawbacks spanning years, the interest can become a burden comparable to a significant share of the principal — so reacting early is always cheaper than stalling.
Installment options and where to appeal the clawback decision
On installments: the Law on Tax Administration 108/2025/QH15 provides a tax-payment extension mechanism for taxpayers facing hardship in specific cases; a company may request the tax authority to consider extending the deadline for the clawback payment with evidence of hardship. This is not an automatic right but a request for consideration — the stronger the proof of objective cash-flow difficulty (not deliberate asset dissipation), the higher the chance of approval.
On appeals: the decision recovering a tax refund is an administrative tax decision, appealable within 90 days of receipt, filed with the issuing authority or its direct superior. The appeal file should focus on the crux: whether the project truly “was never implemented” or was merely delayed for objective reasons, and whether input VAT was used for the project’s stated purpose. If the appeal fails, the company may still sue in court under administrative litigation procedures.
Frequently asked questions
1. Must the entire refunded VAT amount be repaid?
In principle, yes — the clawback decision recovers the full refunded amount for which the company no longer qualifies. Where part of the project was still implemented and the corresponding input VAT still qualifies, the company may prove this to split what must be repaid from what may be kept, but the burden of proof lies with the company.
2. What is the fine rate on a clawback?
The misdeclaration fine is 20% of the understated tax or the excess refunded amount under Article 16 of Decree 125/2020/ND-CP, plus 0.03%-per-day late-payment interest under the Law on Tax Administration 108/2025/QH15. If the authority concludes tax evasion (fraud), the frame shifts to a fine of 1–3 times the evaded tax under Article 17 of Decree 125/2020.
3. Can the clawback be paid in installments?
An extension of the payment deadline may be requested under the Law on Tax Administration 108/2025/QH15 in cases of objective hardship, with supporting evidence. The tax authority considers each case individually; approval is not automatic. Late-payment interest may continue to accrue while the request is pending.
4. Where and within what deadline can the clawback decision be appealed?
Appeal within 90 days of receiving the decision, filed with the issuing tax authority or its direct superior. If dissatisfied with the appeal outcome, the company may file an administrative lawsuit with the competent court.
This article has been quality-reviewed by the FLAW AI Legal Council