Shall all purchases be reiquired to have non-cash payment documents for VAT deduction in Vietnam from July 1, 2025?

Shall all purchases be reiquired to have non-cash payment documents 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 (effective from July 1, 2025) as follows:

Deduction of input value-added tax

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2. Conditions for deduction of input value-added tax are prescribed as follows:

a) There must be a value-added tax invoice for the purchase of goods and services or documents for paying value-added tax at the import stage or documents for paying value-added tax on behalf of a foreign entity as stipulated in clauses 3 and 4 of Article 4 of this Law. The Minister of Finance provides regulations on documents for paying value-added tax on behalf of a foreign entity;

b) There must be non-cash payment documents for purchased goods and services, except for certain specific cases as prescribed by the Government of Vietnam;

c) For exported goods and services, in addition to the conditions specified in point a and point b of this clause, the following are also required: a contract signed with a foreign party regarding the sale, processing of goods, provision of services; an invoice for the sale of goods, provision of services; non-cash payment documents; a customs declaration for exported goods; a packing slip, bill of lading, and insurance documents for goods (if any). The Government of Vietnam prescribes conditions for deduction in cases of foreign e-commerce export platforms and certain other specific cases..

Accordingly, from July 1, 2025, all purchased goods and services must have non-cash payment documents, except for certain specific cases as prescribed by the Government of Vietnam.

As stipulated in Article 15 of Circular 219/2013/TT-BTC, as amended by clause 10, Article 1 of Circular 26/2015/TT-BTC and Article 1 of Circular 173/2016/TT-BTC, bank payment documents are understood to be documents proving the transfer of funds from the buyer's account to the seller’s account opened at payment service organizations in forms of payment that comply with current legal regulations such as checks, payment orders or remittance orders, collection authorizations, bank cards, credit cards, mobile phone sims (e-wallets), and other payment forms as regulated (including cases where the buyer pays from their account to the seller's account named after the sole proprietor or the buyer pays from their own account named after the sole proprietor to the seller's account).

Note that currently, goods and services purchased each time valued under 20 million VND are not required to have non-cash payment documents for VAT deduction according to the provisions of clause 2, Article 12 of the Law on Value Added Tax 2008.

Shall all purchases be reiquired to have non-cash payment documents for VAT deduction in Vietnam from July 1, 2025? (Image from the Internet)

What are prohibited acts in tax deduction and refund in Vietnam from July 1, 2025?

According to the provisions of Article 13 of the Law on Value Added Tax 2024, the following acts are prohibited in tax deduction and refund:

- Buying, giving, selling, organizing advertisement, brokering purchase, selling invoices.

- Creating fictitious transactions of buying, selling goods, providing services, or transactions not conformable with the law.

- Issuing invoices for the sale of goods, provision of services during the period of temporary business suspension, except for issuing invoices to customers to perform contracts signed before the notice of business suspension.

- Using illegal invoices, documents, or illegally using invoices, documents as regulated by the Government of Vietnam.

- Failure to transfer electronic invoice data to the tax authorities as required.

- Altering, misusing, unauthorized access, destroying information systems regarding invoices and documents.

- Giving, receiving, brokering bribes, or committing other acts related to invoices, documents to claim tax deductions, refunds, misappropriating tax funds, evading VAT.

- Collusion, concealment; linking between tax management officials, tax management agencies, businesses, importers, among businesses, importers in the illegal use of invoices, documents to claim tax deductions, refunds, misappropriate tax funds, evade VAT.

What are regulations on VAT payers in Vietnam from July 1, 2025?

Based on Article 4 of the Law on Value Added Tax 2024 the regulations on VAT payers are as follows:

- Organizations, households, individuals producing, trading goods, services subject to VAT (hereinafter referred to as businesses).

- Organizations, individuals importing goods subject to VAT (hereinafter referred to as importers).

- Organizations, individuals conducting production, business in Vietnam purchasing services (including services associated with goods) from foreign organizations without a permanent establishment in Vietnam, individuals outside Vietnam not residing in Vietnam, except for cases stipulated in clauses 4 and 5 of this Article; organizations conducting production, business in Vietnam purchasing goods, services for petroleum exploration and exploitation activities from foreign organizations without a permanent establishment in Vietnam, individuals outside Vietnam not residing in Vietnam.

- Foreign suppliers without a permanent establishment in Vietnam engaged in e-commerce, digital platform business with organizations, individuals in Vietnam (hereinafter referred to as foreign suppliers); organizations as digital platform managers abroad withholding, filing taxes on behalf of foreign suppliers; organizations conducting business in Vietnam applying the VAT deduction method for purchasing services from foreign suppliers without a permanent establishment in Vietnam through e-commerce channels or digital platforms withholding, filing taxes on behalf of foreign suppliers.

- Organizations as managers of e-commerce exchanges, digital platform managers with payment functions withholding, remitting taxes, declaring deducted taxes for business households, business individuals on e-commerce platforms, digital platforms.