What are 03 conditions for VAT deduction in Vietnam from July 1, 2025?

What are 03 conditions for VAT deduction in Vietnam from July 1, 2025?

According to Clause 2, Article 14 of the Law on Value-Added Tax 2024, there are 3 conditions for VAT deduction, which include:

Deduction of Input Value-Added Tax

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2. The conditions for VAT deduction are stipulated as follows:

a) Having a value-added tax invoice for purchasing goods or services, or documentation of value-added tax payment at the import stage, or documentation of value-added tax payment on behalf of the foreign party as specified in Clauses 3 and 4, Article 4 of this Law. The Minister of Finance stipulates the documentation for payment of value-added tax on behalf of a foreign party;

b) Having non-cash payment documentation 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 at points a and b of this clause, the following are also required: a contract with the foreign party for selling, processing goods, or providing services; invoices for selling goods or providing services; non-cash payment documentation; customs declarations for exported goods; packing lists, bills of lading, insurance documents for goods (if applicable). the Government of Vietnam regulates the deduction conditions for cases of exporting goods through e-commerce platforms abroad and some other specific cases.

3. A business establishment not meeting the requirements for tax deduction as prescribed in Clauses 1 and 2 of this Article, and invoices or documents created from prohibited acts under this Law, shall not be eligible for value-added tax deduction.

4. the Government of Vietnam provides detailed regulations on this Article.

Accordingly, based on the aforementioned provisions, the 3 conditions for VAT deduction from July 1, 2025, are as follows:

- Having a value-added tax invoice for purchasing goods or services, or documentation of value-added tax payment at the import stage, or documentation of value-added tax payment on behalf of the foreign party as specified in Clauses 3 and 4, Article 4 of the Law on Value-Added Tax 2024. The Minister of Finance stipulates the documentation for payment of value-added tax on behalf of a foreign party;

- Having non-cash payment documentation for purchased goods and services, except for certain specific cases as prescribed by the Government of Vietnam;

- For exported goods and services, in addition to the conditions specified at points a and b of this clause, the following are required: a contract with the foreign party for selling, processing goods, or providing services; invoices for selling goods or providing services; non-cash payment documentation; customs declarations for exported goods; packing lists, bills of lading, insurance documents for goods (if applicable). the Government of Vietnam regulates the deduction conditions for cases of exporting goods through e-commerce platforms abroad and some other specific cases.

What are 03 conditions for VAT deduction in Vietnam from July 1, 2025? (Image from the Internet)

What are the prohibited acts in VAT deduction in Vietnam from July 1, 2025?

Based on Article 13 of the Law on Value-Added Tax 2024, the prohibited acts in VAT deduction from July 1, 2025, are as follows:

(1) Buying, selling, organizing advertising, brokering the purchase and sale of invoices.

(2) Creating fake transactions of purchasing and selling goods or providing services or transactions not conformable with the law.

(3) Issuing invoices for selling goods or providing services during a temporary business suspension period, except for issuing invoices for customers to execute contracts signed before the suspension notification date.

(4) Using unlawful invoices and documents or using legal invoices and documents unlawfully according to regulations by the Government of Vietnam.

(5) Not transferring electronic invoice data to the tax authority as required.

(6) Altering, misusing, unauthorized access, or destroying the information system related to invoices and documents.

(7) Offering, receiving, brokering bribes, or undertaking other acts related to invoices and documents to get tax deductions, tax refunds, misappropriate tax money, or evade value-added tax.

(8) Conspiring, covering up; coordinating between tax managing officials, tax authorities, and business establishments, importers, between business establishments, and importers in the use of unlawful invoices and documents, or using invoices and documents unlawfully to get tax deductions, tax refunds, misappropriate tax money, or evade value-added tax.

What are regulations on the VAT deduction method in Vietnam from July 1, 2025?

Based on Article 11 of the Law on Value-Added Tax 2024 the regulations on the value-added tax deduction method from July 1, 2025, are as follows:

- The tax deduction method is stipulated as follows:

+ The value-added tax payable under the tax deduction method equals the output value-added tax minus the deductible input value-added tax;

+ The output value-added tax equals the total value-added tax on sold goods and services recorded on the value-added tax invoice.

The value-added tax on sold goods and services recorded on the value-added tax invoice equals the tax-exclusive value of the goods and services sold multiplied by their respective value-added tax rate.

In cases using invoices showing the payment price inclusive of value-added tax, the output value-added tax is determined by the payment price less the tax-exclusive value established according to Point k, Clause 1, Article 7 of the Law on Value-Added Tax 2024.

+ The deductible input value-added tax equals the total value-added tax recorded on invoices for purchased goods and services, value-added tax payment documentation for imported goods, or tax payment documentation for purchased services as prescribed in Clauses 3 and 4 of Article 4 of this Law, meeting the conditions set out in Article 14 of the Law on Value-Added Tax 2024.

- The tax deduction method applies to business establishments that fully comply with accounting, invoice, and document policies according to the law on accounting, invoices, and documents, including:

- Business establishments with annual revenue from selling goods and providing services of 1 billion VND or more, except for households and individuals engaged in production and business;

- Business establishments voluntarily applying the tax deduction method, except for households and individuals engaged in production and business;

+ Foreign organizations and individuals providing goods and services for activities of oil and gas exploration, discovery, development, and exploitation shall pay tax by the deduction method declared, deducted, and paid by the Vietnamese partner.