Tax incentive policy for investment projects in financial difficulty A 60-day deferral of Value Added Tax payment on imports and Value Added Tax refunds are tax incentives that Viet Nam applies to investment projects facing 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: •    Enterprises newly established from investment projects currently in the process of investment that have yet to be brought into operation; •    Active enterprises taking part in investment projects (such as the construction of new production lines, operational expansion, technological innovation, environmental improvement and production capacity enhancement) by means of direct importation or giving the authorization to import machines and equipment to create fixed assets. 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 three requirements: 1.    Having registered for VAT submission under the deduction method and having been granted the Business Registration Certificate or Investment Certificate; owning a legitimate corporate seal, implementing accounting regimes as prescribed by law; and having a bank account; 2.    The total value of machines and equipment imported to create fixed assets is worth more than VND 100 billion; 3.    The investment projects produce and trade goods and services subject to VAT. 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 the customs authority. The application for deferral of VAT payment on importation can be filed directly with the customs authority or sent via post or e-mail. In cases 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. VAT refund 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 five working days, the customs authority is responsible for informing the enterprise that the application dossier they submitted is correct and sufficient for a VAT refund. Only then will the enterprise need to supplement the records of VAT payment on importation as requested. Within three working days after the additional records of VAT payment on importation have been submitted, the tax authority will examine and compare such records with the figures declared in the application dossier to make a decision on the VAT refund. There are two situations that may occur during such process of examining and comparing: •    The amount of submitted VAT written on the records of VAT payments is lower than the amount of VAT initially requested to be refunded. In this case, the VAT amount to be refunded is equal to the amount written on the records of VAT payment; •    The amount of submitted VAT written on the records of VAT payment is higher than the amount of VAT initially requested to be refunded. In this case, the VAT amount to be refunded is the amount initially requested to be refunded. The method of filing the application dossier for a VAT refund is as similar as the aforementioned procedures on applying for deferral of VAT payments.   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. PLF – LAW FIRM