Mandatory Bank Transfer for VAT Input Tax Credit from July 1, 2025

Effective July 1, 2025, the Law on Value Added Tax (VAT) 2024 officially comes into force, replacing the VAT Law 2008. One of the significant changes is the mandatory bank transfer for VAT input tax credit. In the article below, Viet An Law will analyze this notable new regulation: Mandatory Bank Transfer for VAT Input Tax Credit from July 1, 2025.

VAT credit-invoice method

According to Article 11 of the Law on VAT 2024, the VAT credit-invoice method is determined as follows:

VAT payable = Output VAT – VAT input tax credit.

• Output VAT is the amount of VAT on sold goods and services written on the VAT invoices. If the amount payable written on the invoice is inclusive of VAT, the output VAT shall equal (=) the amount payable minus (-) taxable price.
• VAT input tax credit equals (=) the total VAT written on the invoice for the purchase of goods and services or document on payment of VAT on imports or VAT payment document in case of purchase of services and must satisfy the requirements specified in Article 14 of Law on VAT 2024.

Note that the credit-invoice method applies to business establishments that fully comply with regulations on accounting and invoicing, including:

• Business establishments that earn annual revenue of at least 01 billion VND from the sale of goods and services goods sale, except household businesses and individual businesses;
• Business establishments that voluntarily apply the credit-invoice method, except household businesses and individual businesses;
• Foreign organizations and individuals providing goods and services serving petroleum exploration and extraction pay VAT using the credit-invoice method and have VAT declared, deducted, and paid on their behalf by Vietnamese parties.

Mandatory Bank Transfer for VAT Input Tax Credit from July 1, 2025

According to Clause 2, Article 14 of the VAT Law 2024, the conditions for VAT input tax credit are as follows:

• Invoices: There are VAT invoices for the purchase of goods and services or documentary evidence of VAT payment during import or documentary evidence of VAT payment on behalf of foreign parties according to Clause 3 and Clause 4 Article 4 of Law on VAT 2024.
• Documents: There is documentary evidence of cashless payment for goods and services purchased, except in special cases specified by the Government;
• For exported goods and services, in addition to the above requirements, there must also be a contract with the foreign party for the sale, processing of goods, provision of services; invoices for the sale of goods, provision of services; documentary evidence of cashless payment; customs declarations for exports; packing list, bill of lading, goods insurance documents (if any).

Meanwhile, according to the old regulation in Clause 2, Article 12 of the Law on VAT 2008, the conditions for VAT input tax credit were as follows:

• Having an added-value invoice on goods or service purchase or a document proving the payment of value-added tax at the stage of importation;
• Having proof of payment by bank transfer for the purchased goods or services, except goods or services valued at under twenty million Vietnam dong upon each time of purchase;
• For exported goods and services, apart from the above conditions, there must also be a contract with the foreign party for sale, processing of goods, provision of services; invoices for sale of goods, provision of services; documentary evidence of cashless payment; and customs declarations for exports.

Thus, while the Law on VAT 2008 allowed tax credit for transactions under 20 million VND even if paid in cash, the new regulation from July 1, 2025, under the credit 2024, requires “non-cash payment documents” for VAT input tax to be credited.

Currently, the law does not provide a specific definition for “Non-cash payment documents”. However, based on the provisions in Clauses 3 and 4 of Article 15 Circular 219/2013/TT-BTC (amended by Circular 26/2015/TT-BTC, Circular 119/2014/TT-BTC, and Circular 173/2016/TT-BTC), a non-cash payment document is a type of paper, document, or voucher used to record information about payments between the buyer and seller for the purpose of purchasing services or goods as stipulated by tax management law, but not paid in cash; instead, payment is made through other means such as bank transfer, e-wallet,..

Non-cash payment documents include bank transfer receipts and other non-cash payment documents.

In particular, bank transfer receipts are the documents proving the transfer of money from the buyer’s account to the seller’s account opened at providers of payment services in legitimate forms such as:

• Checks,
• Payment order or payment instruction, collection order, direct debit,
• Bank card, credit card,
• SIM card (digital wallet)
• Other methods of payment (even when the buyer transfers money from the buyer’s account to the seller’s account held by an owner of a private company, or when the buyer transfers money from the buyer’s account held by an owner of a private company to the seller’s account if such account has been registered with the tax authority).

Proposal: Goods above 5 million VND from July 1, 2025, must be transferred to be eligible for a VAT tax credit

According to the draft Decree detailing the implementation of some articles of the Law on VAT 2024, Article 10 of the draft Decree specifically regulates the conditions for VAT input tax credit, as stipulated in Clause 2, Article 14 of the Law on VAT 2024.

Accordingly, regarding the regulation on non-cash payment documents, the draft specifically stipulates:

• Must have non-cash payment documents for purchased goods and services (including imported goods) from 05 million VND or more, inclusive of VAT.
• Specifically: Non-cash payment documents are documents proving non-cash payment according to the provisions of Decree 52/2024/ND-CP, excluding documents where the buyer deposits cash into the seller’s account.

The draft also lists some special cases where tax can still be deducted even without common bank transfers, including:

• Offsetting payments for goods and services if clearly stipulated in the contract, with reconciliation minutes and confirmation between parties. In the case of a third party, a tripartite minute is required.
• Payment by loan/borrowing, offsetting debts, with written contracts and clear transfer documents between parties.
• Payment by authorization or payment through a third party, if stipulated in the contract, and the third party is a legal entity or individual operating legally.

In the above cases, if the remaining value of the transaction is 5 million VND or more, this portion must still have non-cash payment documents to be eligible for credit.

Above is the advice of Viet An Law on the issue of Mandatory Bank Transfer for VAT Input Tax Credit from July 1, 2025. Clients who have related questions or need legal support, please contact Tax Agent – Viet An Law Firm for the best support.