The guidance has been positively received by the business community, which hopes it will help resolve long-standing bottlenecks in VAT refund procedures.
A risk warning does not mean a VAT refund is ineligible
One of the key points emphasized by the Tax Department is that a risk warning does not, in itself, mean that a business is ineligible for a tax refund. Information flagging potential risks associated with a seller, an invoice or an entity in the supply chain is intended solely for risk management, review and verification. It does not automatically constitute grounds for concluding that a transaction is fictitious, an invoice is unlawful, or a business fails to meet the requirements for a tax refund.
In recent times, many businesses have proposed that eligible portions of their refund applications should be processed first, while portions showing potential risks should be separated for further verification. One of the issues frequently raised by businesses concerns the verification of F1, F2, F3 and other suppliers in the supply chain. According to businesses, if just one link in the supply chain is identified as posing a risk, the tax refund process may be prolonged or related invoices may be excluded.
Under the new guidance, if a seller, an F2 supplier or another entity in the supply chain is flagged for invoice-related risks, has ceased operations, is not operating at its registered address, has been dissolved, or is in the process of terminating its tax identification number, such information serves only as a basis for tax authorities to assess risks and conduct verification when necessary. It does not constitute grounds for concluding that a business is ineligible for a tax refund or is required to repay VAT that has already been refunded.
Tax authorities will assess applications based on invoices and supporting documents, the legality and authenticity of transactions, as well as whether businesses meet the tax refund requirements applicable to the relevant refund period and the time when the transactions occurred.
For VAT that has already been refunded, recovery will only be pursued when inspection or verification results, or a conclusion by a competent authority, establishes that the business did not meet the tax refund requirements or committed a violation under applicable regulations.
Tax Department’s recommendations to businesses
Businesses are advised to make truthful and complete declarations and proactively verify information about sellers and other details related to their transactions. They should retain complete records and documents demonstrating the legality and authenticity of transactions and their eligibility for tax refunds. Businesses should also proactively coordinate with tax authorities and, upon receiving a notice, provide explanations and supplementary documents as required.
Businesses call for consistent implementation
Many businesses have welcomed the new guidance but are still waiting to see how it will be implemented in practice. At recent dialogues, businesses have repeatedly raised difficulties and obstacles in the tax refund process, including cases in which applications were delayed because an F2 supplier had been flagged for potential risks.
Tax authorities have explained that temporarily suspending the processing of invoices showing potential risks is intended to safeguard the state budget while also reducing legal risks for businesses that may have purchased invoices from entities suspected of violations. Once verification is completed, tax authorities will notify businesses so they can proceed with input VAT credit claims or tax refunds in accordance with regulations.
Nguyen Chanh Phuong, Vice Chairman of the Ho Chi Minh City Handicraft and Wood Processing Association (HAWA), said the new guidance would have a positive impact on businesses in the wood industry, particularly those whose tax refund applications have been delayed because a risk warning arose at one link in their supply chain.
Under the new guidance, risks identified at F2, F3 and subsequent suppliers do not, in themselves, constitute grounds for transferring an entire tax refund application to pre-refund inspection, rejecting the refund application, or recovering VAT that has already been refunded.
HAWA will continue compiling cases of difficulties reported by its members and propose that tax authorities review and address them in accordance with Official Letter No. 6939. Businesses are also monitoring how the guidance is implemented by local tax authorities and hope it will be applied consistently, enabling tax refunds to be processed more promptly and smoothly.
On the tax authorities’ side, Nguyen Tien Dung, Deputy Head of the Ho Chi Minh City Tax Department, said the department had promptly disseminated the new guidance to its divisions, units, tax officials and civil servants to ensure consistent implementation, thereby helping improve the efficiency of VAT refund processing for businesses.
As of the end of August 2026, the Ho Chi Minh City Tax Department had:
- Issued more than 3,300 tax refund decisions.
- Refunded more than VND29.5 trillion (US$1.1 billion) in total.
- Cut the number of overdue applications by one-third compared with the peak backlog recorded in 2025.
(Source: Ho Chi Minh City Tax Department)
