Must businesses perform non-cash payment for each invoice for goods and services of at least VND 20 million in Vietnam?

Must businesses perform non-cash payment for each invoice for goods and services of at least VND 20 million in Vietnam? (Internet image) 

Regarding this issue, LawNet would like to answer as follows:

1. Must businesses perform non-cash payment for each invoice for goods and services of at least VND 20 million in Vietnam?

Pursuant to Point c of Clause 1 of Article 6 of Circular 78/2014/TT-BTC (amended in Circular 119/2014/TT-BTC) stipulates as follows:

There is proof of non-cash payment for each invoice for goods and services of at least VND 20 million (including VAT).

The proof of non-cash payment must comply with regulations of law on VAT.

- In case of any invoice for goods and services that are worth at least VND 20 million but has not been settled and had the proof of non-cash payment at the time the expenses are recorded, the taxpayer may include such purchase in deductible expenses when determining taxable income.

If enterprises have proof of non-cash payment for such payment, they shall make a declaration and reduce expenses proportional to the value of goods or services without proof of non-cash payment in the tax period in which the enterprises makes the cash payment (even when tax authorities and other authorities have issued Decision on inspection of the tax period in which such expenses arise).

The invoices for goods and services paid in cash arising before the effective date of this Circular shall not be adjusted under the regulations of this Point.

- If any enterprise purchases the goods and services related to the production and business operation of that enterprise and the invoice is printed by the cash register under the regulations of the law on invoices; the enterprise shall include such purchase in the deductible expenses according to such invoice and proof of non-cash payment when determining taxable income, provided that the value of such invoice is at least VND 20 million.

- If any enterprise purchases the goods and services related to the production and business operation of that enterprise and the invoice is printed by the cash register under the regulations of the law on invoices; the enterprise shall include such purchase in the deductible expenses according to such invoice and proof cash payment when determining taxable income, provided that the value of such invoice is less than VND 20 million and such invoice is settled in cash.

At the same time, Point b, Clause 1, Article 9 of the Law on Corporate Income Tax 2008 (amended in 2013) stipulates:

Expenditures that have sufficient invoices and documents according to law. The invoice for any purchase of goods or services of at least 20 million VND must be enclosed with proof of cashless payment, except for the cases in which proof of cashless payment is not required by law.

Thus, for payment for each invoice for goods and services of at least VND 20 million, in order to be deducted from VAT and included in deductible expenses when calculating corporate income tax, the buyer must make payment via bank transfer to the seller, except in cases where non-cash payment documents are not required according to the provisions of law.

2. Cases not required non-cash payment for invoice for goods and services of at least VND 20 million in Vietnam

According to Clause 1, Article 9 of Decree 218/2013/ND-CP (amended in Decree 91/2014/ND-CP), cases not required non-cash payment for invoice for goods and services of at least VND 20 million in Vietnam include:

The actual expenditures incurred in relation to the business operations of corporates, including the following expenditures:

- Expenditures on performance of duties pertaining to security and defence education, training, activities of militia forces and other defence and security duties as prescribed;

- The expenditures on operation of Communist Party organizations and social-political organizations in corporates.

- The actual expenditures on HIV / AIDS prevention at workplace, including:

+ Expenditure on provision of training in HIV / AIDS prevention for employees,

+ Expenditure on raising employees’ awareness of HIV / AIDS prevention ,

+ Fees for HIV consultation, examination and testing,

+ Expenditures on supporting employees who are HIV sufferers;

- The direct expenditures on the employees’ welfare with legitimate invoices and documents such as:

+ Expenditures on employees' family occasions;

+ Expenditures on holiday allowance or treatment support; expenditures on professional training;

+ Expenditures on supporting employees’ families affected by natural disasters, hostilities, accidents, illness;

+ Expenditures on providing reward for employees’ children due to their educational achievements;

+ Expenditures on allowances for traveling during holidays of the employees and other welfare expenditures prescribed in guidance of the Ministry of Finance; the total expenditure incurred in the tax year must not exceed actual average 1 month’s salary.

- The actual expenditures incurred in relation to the business operations of corporates, including the following expenditures:

+ Expenditures on performance of duties pertaining to security and defence education, training, activities of militia forces and other defence and security duties as prescribed;

+ The expenditures on operation of Communist Party organizations and social-political organizations in corporates.

+ The actual expenditures on HIV / AIDS prevention at workplace, including:

++ Expenditure on provision of training in HIV / AIDS prevention for employees,

++ Expenditure on raising employees’ awareness of HIV / AIDS prevention ,

++ Fees for HIV consultation, examination and testing,

++ Expenditures on supporting employees who are HIV sufferers;

Nguyen Ngoc Que Anh

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