What are 06 cases eligible for deduction of input value-added tax in Vietnam from July 1, 2025?
What are 06 cases eligible for deduction of input value-added tax in Vietnam from July 1, 2025?
Based on Clause 1, Article 14 of the 2024 Law on Value-Added Tax, effective from July 1, 2025, business establishments that pay value-added tax (VAT) using the credit method can deduct input VAT as follows:
(1) The entire input VAT on goods and services used for production and business of taxable goods and services can be deducted, including the input VAT of uncompensated taxable goods and services that are lost or goods that naturally shrink due to physical and chemical properties during transportation;
(2) For goods and services used simultaneously for the production and business of both taxable and non-taxable goods and services, only the input VAT of the goods and services used for production and business of taxable goods and services can be deducted. Business establishments must separately account the deductible and non-deductible input VAT; if separate accounting is not possible, the deductible input VAT is calculated based on the percentage of revenue from taxable goods and services compared to total revenue from sold goods and services;
(3) The entire input VAT on goods and services sold to organizations and individuals using humanitarian aid and non-refundable aid funds can be deducted;
(4) The entire input VAT on goods and services used for activities of exploration, development of oil and gas fields can be deducted;
(5) Input VAT arising in any month or quarter can be declared and deducted when determining the tax payable for that month or quarter. Any input VAT not fully deducted in a month or quarter can be carried forward to subsequent months or quarters.
In cases where a business establishment discovers errors or omissions in its declared deductible input VAT, it can correct them before tax authorities or competent agencies announce decisions for tax inspection or auditing as follows:
Taxpayers must file supplemental declarations in the month or quarter in which the errors or omissions are found if the errors or omissions increase the tax payable or reduce the refundable tax; taxpayers must pay the increased tax amount or reclaim the refunded tax and pay any late payment interests to the state budget (if any).
Taxpayers who find the errors or omissions that reduce the tax payable or only increase or decrease the VAT amount to be carried forward to the next month or quarter must file in the month or quarter when the errors or omissions are detected;
(6) The Government of Vietnam specifies the detailed deduction of input VAT for: goods and services forming fixed assets for employees; cases of capital contribution with assets; goods and services purchased through authorization for another organization or individual whereby the invoice is in the name of the authorized party; fixed assets being passenger vehicles of 09 seats and under; manufacturing and business establishments organizing closed-loop production, centralized accounting.
Note: For non-deductible input VAT, business establishments can include it in expenses for corporate income tax calculation or in the initial cost of fixed assets according to the provisions of the corporate income tax law, except for VAT on goods and services purchased without non-cash payment documents as stipulated by the Government of Vietnam.
What are 06 cases eligible for deduction of input value-added tax in Vietnam from July 1, 2025? (Image from the Internet)
Which entities are the taxpayer for value-added tax in Vietnam?
According to Article 4 of the 2024 Law on Value-Added Tax (effective from July 1, 2025), the taxpayers liable for value-added tax are defined as follows:
- Organizations, households, and individuals producing or trading goods and services subject to value-added tax (hereinafter referred to as business establishments).
- Organizations and individuals importing goods subject to value-added tax (hereinafter referred to as importers).
- Organizations and individuals operating and doing business in Vietnam purchasing services (including services associated with goods) from foreign organizations without a permanent establishment in Vietnam, and individuals abroad who are non-residents in Vietnam, except as provided in clauses 4 and 5, Article 4 of the 2024 Law on Value-Added Tax; organizations doing business in Vietnam purchasing goods and services to conduct exploration and development of oil and gas fields and oil and gas extraction from foreign organizations without a permanent establishment in Vietnam, individuals abroad who are non-residents in Vietnam.
- Overseas suppliers without a permanent establishment in Vietnam engaged in e-commerce activities or business on digital platforms with organizations and individuals in Vietnam (hereinafter referred to as overseas
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