Hai, the developer of a wind power project in the Central Highlands province of Dak Lak, said that since the end of last year, tax agencies have repeatedly rejected his company’s requests for value-added-tax refunds of nearly VND1.5 trillion ($65 million).

The tax authorities have told him that the project needs a license indicating it is ready to begin production. As long as construction is ongoing, the company won't receive its refund.

However, with a project price tag of over VND16 trillion, the refund is a big amount which would help cover construction costs, Hai said.

"We have to borrow money to continue the project, while we could have covered costs with the refund."

Many other developers of renewable, hydropower and thermal power plants are also facing the same difficulties, with authorities saying they are not eligible for refunds before construction work is complete and they have got the ministry’s certification that they can begin production.

The Trungnam Group, a major developer of renewable projects, has several projects worth $2 billion and is eligible for a tax refund of VND2.1 trillion.

However, tax authorities in Dak Lak, the central province of Ninh Thuan and the southern province of Tra Vinh have rejected all its requests so far.

"This is an issue that has created difficulties for developers of big projects," said Nguyen Tam Tinh, Trungnam Group chairman.

Some experts are concerned that developers will be hurt by the legal hurdle.

Tran Viet Ngai, chairman of the Vietnam Energy Association, said there were conflicting regulations regarding this issue that have made developers struggle to mobilize funds for their projects.

This is on top of difficulties already caused by the prolonged Covid-19 pandemic, he said, adding: "Policies should aim to support, not to create obstacles."

He suggested that developers be allowed to access due tax refunds even if their projects haven’t begun operations.

Thinh proposed that a power purchase agreement should be made adequate for energy developers to get a tax refund, as this would help speed up project construction.

The Ministry of Industry and Trade has also voiced concerns over two thermal projects – the Van Phong 1 and Nghi Son 2 power plants in central Vietnam, each with a price tag of $2.5 billion – not receiving their tax refunds.

Without the refunds, these projects will face a severe cash flow crunch that could delay their operation schedule, it said in a letter to the Ministry of Finance.

Tax authorities have said they are sitting down with businesses to sort out issues concerning VAT refunds.