“Sixty-day deferral of Value Added Tax payment on importation and Value Added Tax refund are the tax incentives Viet Nam applies to investment projects facing objective financial problems.“
The following enterprises are entitled to select between Value Added Tax (VAT) deferral on importation and VAT refund for machines and equipment imported to create fixed assets for investment projects:
When such enterprises encounter objective financial difficulties, for instance, failure to distribute a sufficient amount of money to pay for the VAT upon importation, reliance on loans from commercial banks on the importation of machines and equipment for production and trading purposes, or in case of great losses incurred by the delayed customs clearance of commodities, they are entitled to choose between the abovementioned incentives if they satisfy the following 3 requirements:
Deferral of VAT payment on importation
Enterprises are eligible for deferred VAT payment on importation once the first shipment of imported goods has reached the port (worth less than VND 100 billion). The maximum extended period must be within 60 days commencing from the deadline for VAT submission prescribed by law. The imported goods shall be granted customs clearance after the completion of inspection carried out by customs authority.
The application for deferral of VAT payment on importation can be filed directly with customs authority or sent via post or e-mail.
In case where the customs authority approves the application for such deferral, a written notification on the approval of VAT payment deferral will be issued within 03 working days commencing from the date of receipt of sufficient documents.
Enterprises should note that it is only required to include records of VAT payment on importation in the application dossier sent to customs authority for VAT refund after the dossier is declared correct, sufficient and in accordance with law by the customs authority. Within 5 working days, the customs authority is responsible for informing the enterprise that the application dossier they submitted correct and sufficient for VAT refund. Only then will the enterprise need to supplement the records of VAT payment on importation as requested.
Within 3 working days after the additional records of VAT payment on importation have been submitted, tax authority will examine and compare such records with the figures declared in the application dossier to draw a decision on VAT refund. There are two situations that may occur during such process of examining and comparing:
The method of filing the application dossier for VAT refund is as similar as the aforementioned procedures on applying for deferral of VAT payment.
In addition, it is important for enterprises to note that the abovementioned tax incentives will not apply to machines and equipment used to create specialized fixed assets for credit institutions; businesses of reinsurance, life insurance, and securities; medical and training facilities; etc.