Are documentary evidence of cashless payment for goods and services purchased required for VAT deduction in Vietnam from July 1, 2025?

Are documentary evidence of cashless payment for goods and services purchased required for VAT deduction in Vietnam from July 1, 2025?

Based on point b, clause 2, Article 14 of the Law on Value-Added Tax 2024 as stipulated:

Deduction of Input Value Added Tax

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2. Conditions for input value added tax deduction are stipulated as follows:

a) There is an invoice for value-added tax on the purchase of goods or services, or documentation of payment of value-added tax at the import stage, or documentation of payment of value-added tax on behalf of a foreign entity as stipulated in clause 3 and clause 4 of Article 4 of this Law. The Minister of Finance stipulates the documents for payment of value-added tax on behalf of foreign entities;

b) There are documentary evidence of cashless payment for purchased goods and services, except for specific cases as stipulated by the Government of Vietnam;

c) For exported goods and services, besides the conditions stipulated at point a and point b of this clause, there must also be: a contract signed with a foreign party for the sale, processing of goods, or provision of services; a sales invoice for goods, and provision of services; documentary evidence of cashless payment; a customs declaration for exported goods; a packing list, bill of lading, goods insurance documents (if any). The Government of Vietnam stipulates conditions for deduction for the case of exporting goods via overseas e-commerce platforms and some other specific cases.

3. Businesses that do not meet the regulations on tax deduction in clause 1 and clause 2 of this Article and bills, receipts made from prohibited actions under this Law shall not be entitled to value-added tax deduction.

4. The Government of Vietnam specifies this Article in detail.

Thus, according to the above regulations, all purchased goods and services must have documentary evidence of cashless payment for VAT deduction, except for specific cases as stipulated by the Government of Vietnam.

Are documentary evidence of cashless payment for goods and services purchased required for VAT deduction in Vietnam from July 1, 2025? (Image from Internet)

Which entities are VAT taxpayers in Vietnam?

Based on Article 4 of the Law on Value-Added Tax 2024, those liable to pay VAT include:

(1) Organizations, households, and individuals producing and trading goods and services subject to VAT (hereinafter referred to as business establishments).

(2) Organizations and individuals importing goods subject to VAT (hereinafter referred to as importers).

(3) Organizations and individuals engaged in production and business in Vietnam purchasing services (including services attached to goods) from foreign organizations without a permanent establishment in Vietnam, and individuals abroad who are non-residents in Vietnam, except for the cases stipulated in clauses 4 and 5 of Article 4 of the Law on Value-Added Tax 2024;

Organizations engaged in production and business in Vietnam purchasing goods and services to conduct activities of exploration, development, and exploitation of oil and gas fields from foreign organizations without a permanent establishment in Vietnam, and individuals abroad who are non-residents in Vietnam.

(4) Foreign suppliers without a permanent establishment in Vietnam conducting electronic commercial business, platform-based business with organizations and individuals in Vietnam (hereinafter referred to as foreign suppliers);

Organizations as managers of foreign digital platforms executing withholding and payment of tax obligations on behalf of foreign suppliers; Business organizations in Vietnam applying the deduction method for calculating VAT by purchasing services from foreign suppliers without a permanent establishment in Vietnam through electronic commerce channels or digital platforms shall be liable to withhold and pay tax obligations on behalf of foreign suppliers.

(5) Organizations that are managers of e-commerce exchanges, digital platform managers with payment functions executing withholding, paying taxes, and declaring the taxes that have been withheld for business households, individuals doing business on e-commerce platforms, and digital platforms.

Note: The Government of Vietnam details the above sections (1), (4), and (5). Provisions regarding tax liability in cases where a foreign supplier provides services to a purchaser that is a business organization in Vietnam adopting the tax deduction method as stipulated in section (4).

When does the Law on Value-Added Tax 2024 take effect?

Based on Article 18 of the Law on Value-Added Tax 2024, the VAT Law 2024 comes into effect from July 1, 2025, except for the following provisions:

Provisions on the revenue levels of households and individuals engaged in production and business who are not subject to tax in clause 25, Article 5 of the Law on Value-Added Tax 2024 and Article 17 of the Law on Value-Added Tax 2024 take effect from January 1, 2026.