Shall non-cash payment records be eligible for deduction of input VAT in Vietnam?

Shall non-cash payment records be eligible for deduction of input VAT in Vietnam?

Based on the provisions in Clause 2, Article 12 of the Law on Value-Added Tax 2008, amended by Clause 6, Article 1 of the 2013 Law on Amendments to Law on Value-Added Tax regarding the deduction of input VAT as follows:

Deduction of input value-added tax

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2. The conditions for deducting input value-added tax are as follows:

a) There is a value-added tax invoice for purchased goods and services or a document indicating the payment of value-added tax at the import stage;

b) There is a non-cash payment record for purchased goods and services, except for goods and services purchased in a single transaction valued at less than twenty million dong;

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Additionally, according to Clause 2, Article 15 of Circular 219/2013/TT-BTC, amended by Clause 10, Article 1 of Circular 26/2015/TT-BTC regarding the conditions for input VAT deduction as follows:

Conditions for deducting input value-added tax

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2. There is a non-cash payment record for purchased goods and services (including imported goods) with a value of twenty million dong or more, except for cases of imported goods and services in a single transaction valued at less than twenty million dong, goods and services purchased in a single transaction per invoice less than twenty million dong at a price inclusive of VAT, and cases where the business establishment imports goods as gifts or donations from foreign organizations or individuals.

Non-cash payment records include payment documents through banks and other non-cash payment documents as instructed in Clauses 3 and 4 of this Article.

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Thus, non-cash payment records are still eligible for deducting input VAT for purchased goods and services, except for goods and services purchased in a single transaction valued at less than twenty million dong.

Shall non-cash payment records be eligible for deduction of input VAT in Vietnam? (Image from Internet)

What are invoices and documents in Vietnam?

(1) What is an invoice?

According to Clauses 1, 2, 3 of Article 3 Decree 123/2020/ND-CP, an invoice is an accounting document created by an organization or individual selling goods or providing services, recording information on the sale of goods or provision of services. The invoice is presented in one of two forms:

- An electronic invoice is an invoice with or without a tax authority's code, presented in electronic data form by an organization or individual selling goods or providing services, created using electronic means to record information on the sale of goods or provision of services as prescribed by accounting law and tax law, including cases where invoices are generated from cash registers connected to transfer electronic data to tax authorities.

- An invoice printed by the tax authority is an invoice presented in paper form, printed by the tax authority for sale to organizations and individuals subject to and eligible to purchase invoices from the tax authority as specified in Article 23 of Decree 123/2020/ND-CP for use when selling goods or providing services.

(2) What is a document?

According to Clauses 4, 5, 6 of Article 3 Decree 123/2020/ND-CP, a document is a record used to capture information about deductible tax amounts, tax collections, fees, and charges belonging to the state budget as regulated by tax management law. Documents as defined in this Decree include personal income tax withholding documents, and tax, fee, and charge receipts presented in electronic form or pre-printed, or self-printed.

- Electronic documents include various types of documents and receipts as per Clause 4, Article 3 of Decree 123/2020/ND-CP, presented in electronic data form by organizations or individuals responsible for withholding tax, provided to taxpayers or by tax, fee, and charge collecting organizations provided through electronic means as prescribed by fee, charge, and tax laws.

- Pre-printed or self-printed documents include various types of documents and receipts as per Clause 4, Article 3 of Decree 123/2020/ND-CP, presented in paper form printed by tax authorities, or tax, fee, and charge collecting organizations for use, or self-printed on computing devices, cash registers, or other devices when withholding tax, collecting tax, fees, and charges as prescribed by fee, charge, and tax laws.

What are regulations on the use of illegal invoices and documents in Vietnam?

According to Clause 9, Article 3 of the Law on Tax Administration 2019, the use of illegal invoices and documents is defined as:

- Using fake invoices and documents;

- Using invoices and documents not yet in use or that have expired;

- Using invoices suspended during the enforcement period of suspension, except as allowed by the tax authority notification;

- Using electronic invoices not registered for use with the tax authority;

- Using electronic invoices without a tax authority's code where such codes are required;

- Using invoices for goods and services with issuance dates post declaration of the seller's inactivity at the registered business address by the tax authority;

- Using invoices and documents for goods and services with issuance dates earlier than the determination of invoice/document issuer's inactivity at the registered business address by the tax authority, or without a tax authority notification of inactivity, but with confirmation from the tax authority, public security, or other competent authorities that the invoices/documents are illegal.