Korea says Vietnam VAT refunds resolved for Korean exporters

South Korea's industry ministry said Monday that Vietnam has moved to resolve a value-added tax refund delay that had been the biggest outstanding complaint of Korean companies operating there, with the Vietnamese tax authority ordering its provincial offices to apply the refund rules to past transactions.

The measure, issued in September, tells tax departments in every Vietnamese province and city to apply the internal-export VAT regime set out in a law passed on July 1, 2025 to earlier dealings as well. Seoul said the change followed sustained diplomatic efforts and that it should sharply ease the cash-flow strain Korean manufacturers have carried.

The dispute dates to Vietnam's customs authority, which in December 2022 and May 2023 issued interpretations restricting the internal-export regime for foreign traders that maintain a representative office in the country. Refunds had been paid as a matter of practice from the scheme's introduction in 2015 until 2022 regardless of whether such an office existed, and the rulings came without a grace period, leaving companies short of cash.

A survey by the Korean Chamber of Commerce and Industry in Vietnam found that the few responding companies alone reported delayed refunds and associated penalties of at least 40 billion won ($29.8 million).

A first step came in July 2025, when Vietnam wrote the legal basis for the internal-export system into its law and implementing decree after repeated complaints from Korea's national tax service, industry ministry and foreign ministry. Vietnamese authorities at that point recognized only future effect, refusing to apply the amended rules to transactions completed before the change.

"We are positively reviewing the VAT refunds," Mai Xuan Thanh, head of the Vietnamese tax authority, said, according to the ministry.

The industry ministry said it will keep supporting Korean companies in securing their refunds on the ground and will widen cooperation networks with major trading partners to back Korean business activity abroad.