Conditions for input value-added tax deduction

1. Conditions on value-added invoices:

✨ Lawful value-added invoices of input goods or services or receipts of value-added tax payment at the stage of importation or receipts of VAT payment on behalf of foreign parties according to the guidance of the Ministry of Finance applicable to foreign organizations without Vietnamese legal status and foreign individuals doing business or earning income in Vietnam.

✨ In order to be eligible for input value-added tax deduction, invoices must meet all legal, valid, and reasonable factors.

⏩ Legal invoice:

✔ Legal invoice is an invoice issued by the Ministry of Finance or an invoice printed by enterprises according to the regulations of the Government and the Ministry of Finance on printing, issuing, managing, and using invoices.

✔ Invoices are printed by enterprises according to the prescribed form, registered, and accepted by the tax authorities.

⏩ Valid invoice:

 ✔ Invoices cannot be erased or modified.

✔ Specify invoice date, buyer's name, buyer's address, and form of payment.

✔ Specify goods and services, a unit of calculation, goods, tax, and total payment.

✔ Must have the signature of the Director. If there is no sign of the Director, there must be a power of attorney and stamped on the left side of the invoice, the authorizing person must sign here.

✔ Buyers: must sign, write their full name, or stamp "sales by phone".

⏩ Reasonable invoice:

✔ Expenses with legal and valid invoices are still not enough, but such expenses must be reasonable, that is, the actual costs incurred at the enterprise and suitable to the production and business activities of the enterprise.

✔ Reasonable expenses will be deducted when determining CIT.

2. Conditions on payment vouchers:

🔰 Having a non-cash payment voucher for purchased goods and services (including imported goods) of twenty million dongs or more, except for cases where the value of each time imported good and service is less than twenty million dongs, goods, and services purchased each time according to the invoice is under twenty million dong at the price inclusive of VAT and in case the business establishment imports the goods as gifts or presents of organizations and individuals abroad.

🔰 Non-cash payment vouchers include bank payment vouchers and other non-cash payment vouchers.

2.1. Vouchers of payment via bank:

✔️ Documents proving the transfer of money from the buyer's account to the seller's account at payment service providers in the form of payment in accordance with the provisions of law: payment order, check.. .and other forms of payment as prescribed.

✔️ Business accounts used for payment are not required to notify or register with tax authorities. But it is mandatory for businesses to register a bank account with the Department of Planning and Investment.

✔️ Goods and services purchased each time according to the invoice from over twenty million VND (VAT included) if there are no vouchers of payment via bank, it will not be deducted.

✔️ For goods and services purchased with deferred payment or installment payment with a value of twenty million VND or more, the business establishment shall base on the written contract to purchase goods and services, value-added invoices, and vouchers of payment via a bank of goods and services on deferred payment or installment payment for declaration and deduction of input value-added tax. In case there are no vouchers of payment through the bank because it is not yet the time of payment according to the contract, the business establishment is still entitled to declare and deduct input value-added tax.

✔️ In case when making payment, the enterprise does not have a bank payment voucher, it must declare and reduce the amount of VAT already deducted for the value of goods and services without bank payment documents in the tax period in which the payment in cash is incurred.

2.2. Other non-cash payments:

⭕ In the case of goods or services purchased by the clearing method between the value of purchased goods and services and the value of goods or services sold or borrowed, this payment method is regulated specifically in the contract, and there must be a record of data comparison and confirmation between the two parties on the clearing between purchased goods and services and sold or borrowed goods and services. In the case of clearing debts through a third party, there must be a record of clearing debts of three (3) parties as a basis for a tax deduction.

⭕ In case goods and services are purchased by the debt clearing method such as borrowing money; to set off debts through a third party, which is specifically stipulated in the contract, there must be a loan contract in the form of a previously made document and a money transfer document from the bank's account from the lender to the borrower's account for a loan in cash, including the case of clearing between the value of purchased goods and services with the amount that the seller supports the buyer or ask the buyer to pay for it.

⭕  In case the input goods and services are authorized to be paid through a third party via bank payment (including the case where the seller requests the buyer to pay via bank to the third party, the seller only requests the purchaser to pay through the bank). The payment by authorization or payment to the third party designated by the seller must be specified in the contract in writing and a third party is a legal person or person operating according to regulations of the Law.

3. Some other special cases:

➥ In case of purchasing goods and services from one supplier with a value of fewer than twenty million dongs, but buying them multiple times on the same day with a total value of twenty million dongs or more, only tax deductions are allowed for the case with vouchers of payment via bank.

➥ In case of buying a car with less than 9 seats:

✔ If the enterprise operates in the field of transportation, freight, and passenger transport, the entire input VAT will be deducted.

✔ If the enterprise does not operate in the field of transportation goods with a value of over 1.6 billion VND (excluding VAT), only 160 million VND will be deducted from VAT (corresponding to the value of 1.6 billion) and the rest will not be deducted.

⇒ If you have any questions, please register here for TASCO's earliest advice or contact hotline: 0975480868 (Zalo)

Customers can refer to some other services that TASCO provides:

◾ Guidance on reducing the value-added tax to 8% according to Decree 15/2022/ND-CP

◾ VAT refund service

◾ Tax agent service

◾ Financial reporting services

TASCO – THE HIGHEST RESPONSIBLE TAX AGENT OF EVERY SERVICE

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