What are amendments to conditions for input VAT deduction in Vietnam from July 1, 2025?

What are amendments to conditions for input VAT deduction in Vietnam from July 1, 2025?

Based on Clause 2, Article 14 of the Law on Value-Added Tax 2024, which stipulates changes in the conditions for input VAT deduction from July 1, 2025, as follows:

Deduction of Input Value-Added Tax

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

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

b) Have non-cash payment documents for purchased goods and services, except for certain special cases as regulated by the Government of Vietnam;

c) For exported goods and services, in addition to the conditions specified in Points a and b of this Clause, there must also be: a contract signed with the foreign party for the sale, processing of goods, or provision of services; an invoice for selling goods or services; non-cash payment documentation; customs declaration for exported goods; packing slip, bill of lading, insurance documentation (if any). The Government of Vietnam regulates the conditions for deduction concerning the export of goods through e-commerce platforms overseas and several other special cases.

3. Any business entity not meeting the conditions for VAT deduction outlined in Clauses 1 and 2 of this Article and having invoices and documents created from prohibited acts described in this Law shall not be eligible for value-added tax deduction.

4. The Government of Vietnam provides detailed regulations for this Article.

Additionally, based on Clause 2, Article 12 of the Law on Value-Added Tax 2008, amended by Clause 6, Article 1 of the Amended Law on Value-Added Tax 2013, stipulates as follows:

Deduction of Input Value-Added Tax

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Conditions for deducting input value-added tax are stipulated as follows:

a) Have a value-added tax invoice for purchasing goods or services or documentation of value-added tax payment at the importation stage;

b) Have non-cash payment documents for purchased goods and services, except for purchases per incident valued under twenty million VND;

c) For exported goods and services, in addition to the conditions specified in Points a and b of this Clause, there must also be: a contract signed with the foreign party for the sale, processing of goods, or provision of services; sales invoice for goods and services; non-cash payment documentation; customs declaration for exported goods.

Payment for exported goods and services in the form of set-off against imported goods and services or paying debts on behalf of the state is considered non-cash payment.

Thus, from July 1, 2025, the conditions for input VAT deduction will change as follows:

- Additional cases require documentation of value-added tax payment at the importation stage or VAT payment documentation on behalf of the foreign party as specified in Clauses 3 and 4, Article 4 of the Law on Value-Added Tax 2024.

- Goods and services purchased per incident valued under 20 million VND must have non-cash payment documentation to be eligible for input VAT deduction, unlike the current situation where it is not required.

- Packing slip, bill of lading, and insurance documentation (if any) are added to the required documentation for exported goods and services when input VAT deduction.

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

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

Prohibited actions in VAT deduction and refund are stipulated in Article 13 of the Law on Value-Added Tax 2024, which outlines prohibited actions in VAT deduction from July 1, 2025, including:

- Buying, gifting, selling, advertising, brokering the purchase and sale of invoices.

- Creating fake transactions for the purchase of goods and services or transactions not conformable to the law.

- Issuing invoices for goods and services during a temporary business suspension, except for issuing invoices to customers to perform contracts signed before the business suspension notice.

- Using illegal invoices and documents, or illegally using invoices and documents as per the Government of Vietnam's regulations.

- Failing to transfer electronic invoice data to the tax authority as required.

- Altering, misusing, unauthorized access, or destroying information systems related to invoices and documents.

- Bribing or engaging in other acts related to invoices and documents to get tax deductions, refunds, claim tax money, or evade value-added tax.

- Colluding, covering up; connecting tax management officials, tax management agencies and business entities, importers, or between business entities and importers in using illegal invoices and documents to get tax deductions, refunds, claim tax money, or evade value-added tax.

What is the time for calculating VAT in Vietnam from July 1, 2025?

Based on Article 8 of the Law on Value-Added Tax 2024, which regulates the time for calculating VAT in 2024 as follows:

- The point of value-added tax determination is stipulated as follows:

+ For goods, it is the point of transfer of ownership or use rights to the purchaser or the point of invoice issuance, regardless of whether payment has been received or not;

+ For services, it is the completion of service provision or the point of service invoice issuance, regardless of whether payment has been received or not.

- The point of value-added tax determination for the following goods and services is as regulated by the Government of Vietnam:

+ Exported and imported goods;

+ Telecommunication services;

+ Insurance business services;

+ Electricity supply, electricity, and clean water production activities;

+ Real estate business activities;

+ Construction, installation, and petroleum activities.