On the Ministry of Finance's Information Portal, reader P.T. H reflected difficulties in determining and handling input value-added tax (VAT) arising when implementing the relocation of technical infrastructure works from compensation and site clearance funds.
According to reports, based on Articles 91, 92, 94, 102 and 104 of the 2024 Land Law, compensation costs and capital for relocating existing technical infrastructure works are determined in the total investment of the project.
Clause 3, Article 102 of the Land Law stipulates that for technical infrastructure and social infrastructure works attached to land in use that are not in the cases specified in Clauses 1 and 2 of this Article, the compensation level is calculated by the new construction value of works with equivalent technical standards according to the provisions of specialized laws.
According to point b, clause 1, Article 14 of Decree No. 181/2025/ND-CP and clause 1, Article 4 of Decree No. 123/2020/ND-CP, amended and supplemented in Decree No. 70/2025/ND-CP, the collection of compensation and support for relocation of technical infrastructure works is not subject to VAT and does not require invoicing.
However, according to the approved compensation plan, the compensation cost includes VAT.
In fact, some organizations only pay pre-tax compensation, and the VAT will be paid when the enterprise issues a VAT invoice for the entire compensation cost according to the approved plan.
Meanwhile, to carry out the relocation and reconstruction of technical infrastructure works according to the approved plan, businesses must purchase materials and equipment, hire construction contractors and incur input VAT according to regulations.
Because the compensation cost for relocating technical infrastructure works falls under the case of not having to make invoices, problems arise in determining and handling the actual input VAT that the enterprise has paid to carry out the relocation of works.
Answering this content, the Ministry of Finance cited Clause 1, Clause 2, which have been supplemented with point c according to Clause 2, Article 3 of Decree No. 144/2026/ND-CP dated May 5, 2026, and Clause 16, Article 23, Section 1, Chapter III of Decree No. 181/2025/ND-CP dated July 1, 2025 of the Government on VAT deduction.
According to regulations, input VAT of goods and services used for the production and business of goods and services subject to VAT is fully deducted according to regulations.
In case goods and services are used simultaneously for taxable and non-taxable activities, only the input VAT portion used for the production and business of goods and services subject to VAT is deducted.
At the same time, the revenue of goods and services subject to VAT, including the revenue of goods not subject to VAT declaration and payment, if any, according to Clause 1, Article 5 of the VAT Law No. 48/2024/QH15 amended and supplemented by Law No. 149/2025/QH15.
For input VAT that is not deductible, the business establishment is included in the cost to calculate corporate income tax or included in the original price of fixed assets according to the provisions of the law on corporate income tax, except for VAT on goods and services purchased each time with a value of 05 million VND or more without non-cash payment documents.
