Changes to VAT Deduction Conditions

According to the new provision in Clause 2, Article 14 of the 2024 Law on Value-Added Tax, effective from July 1, 2025, the conditions for input VAT deduction will be tightened, especially concerning the method of payment.

1. Comparison of Deduction Conditions Before and After July 1, 2025

Current regulations: Purchases of goods/services under 20 million VND can still be deducted without requiring non-cash payment evidence.
New regulation (from 1/7/2025): All input invoices must have non-cash payment proof to qualify for VAT deduction, unless otherwise specified by the Government.

2. Objectives

• Prevent VAT refund fraud

• Strengthen cash flow control

• Encourage non-cash payments

3. What Businesses Should Do

• Review all purchase transactions

• Plan to shift payment methods

• Train accounting/procurement staff

4. Important Notes

• Remote purchases may be guided separately.

• If payment conditions are unmet, input VAT cannot be deducted and must be recorded as expense.

Conclusion:
The mandatory non-cash payment requirement for VAT deduction from July 1, 2025, will significantly impact accounting processes. Businesses must quickly adapt to preserve their deduction rights.

Viet Australia
Viet Australia Auditing Company is an independent auditing organization licensed and established in 2007 in the Socialist Republic of Vietnam.