Under Article 14 of the Law on Value-Added Tax No. 48/2024/QH15 (effective 1 July 2025), qualifying input goods and services must possess non-cash payment documentation to claim input VAT deduction. Decree No. 181/2025/ND-CP (Article 26) tightens the non-cash payment threshold to VND 5 million or more (inclusive of VAT), replacing the VND 20 million threshold that applied before 1 July 2025 under Circular No. 219/2013/TT-BTC.
For foreign-invested enterprises (FDI) operating in Vietnam, this change affects routine spending, including corporate hospitality, travel expenses, office consumables, and vendor payments. Treasury and accounting teams need internal controls that prevent VAT disallowances during tax audits. This guide sits within our Vietnam VAT for FDI guide; the rate changes introduced by the same law are covered in Vietnam VAT rate 2026.
Transitional Timeline and Governing Legal Framework
The rules fall into two periods: through 30 June 2025 under the Law on VAT 2008 (amended 2013) and Circular No. 219/2013/TT-BTC, and from 1 July 2025 under Law No. 48/2024/QH15 and Decree No. 181/2025/ND-CP. The new Law removed the VND 20 million figure from primary legislation and set the principle of non-cash settlement; the Decree sets the actionable threshold at VND 5 million or more.
| Verification Criteria | Applied Through 30 June 2025 | Applied from 1 July 2025 Onward | Operational Impact on FDI Companies |
|---|---|---|---|
| Primary Legislation | Law 13/2008/QH12; TT 219/2013/TT-BTC | Law on VAT 2024; ND 181/2025 | Internal payment approval workflow update |
| Mandatory Non-Cash Threshold | VND 20 million or more (with VAT) | VND 5 million or more (with VAT) | Sharp increase in mandatory wire transfers |
| Cash Spending Allowance | Below VND 20 million | Below VND 5 million | Office petty cash funds drastically restricted |
| Same-Day Same-Vendor Rule | Aggregated from VND 20 million | Aggregated from VND 5 million | Elimination of split-invoice cash practices |
| CIT Scope Distinction | Deductible threshold at VND 20M (TT 78), applied until 14 December 2025 | VAT at VND 5M from 1 July 2025; CIT also VND 5M from 15 December 2025 (Decree 320/2025, Article 9) | Same threshold, different effective dates |
This regulatory shift requires accounting departments to immediately discontinue petty cash disbursements for invoices reaching VND 5,000,000. If an accountant disburses cash for an invoice of VND 5,100,000 dated after 1 July 2025, 100% of the input VAT is disqualified from deduction.
Qualifying Non-Cash Payment Methods and Same-Day Aggregation Rules
To qualify, non-cash payment documents must substantiate money transfers from the buyer’s account to the seller’s registered account through a licensed payment service provider.
Four Recognized Non-Cash Payment Channels
The Decree recognizes non-cash payment documents under Decree 52/2024/ND-CP, excluding cash deposited by the buyer into the seller’s account, plus specific cases. The four most common are:
- Commercial Bank Transfers: Payment orders, bank remittance slips, or debit advices confirming fund transfers from the purchasing entity’s corporate account to the seller’s tax-registered bank account.
- Bilateral Debt Offsetting: Applied when trading partners engage in reciprocal sales of goods and services. This method requires clear stipulations in economic contracts, formal bilateral debt reconciliation minutes, and bank transfer documentation for any residual settlement balance of VND 5 million or more.
- Authorized Third-Party Settlement: Payments made to or executed by an authorized third party are recognized when the third party acts lawfully and the arrangement is set out in the written commercial contract.
- Employee Personal Card Settlements with Corporate Reimbursement: Applied to employee business travel, corporate lodging, and client entertainment. Deductions are accepted provided the following conditions are met: (1) the employee is authorized under internal financial regulations; (2) the employee pays by a non-cash method such as a personal card; and (3) the company reimburses by bank transfer to the employee’s bank account. The e-invoice must carry the enterprise’s name and tax code.
The Same-Day Aggregation Rule
When an enterprise makes multiple purchases from the same vendor within a single calendar day, the rules aggregate all transaction values. If individual invoices are below VND 5 million, but the combined gross value reaches or exceeds VND 5 million, input VAT is deductible only for the invoices backed by non-cash payment documents.
| Transaction Scenario | Gross Total | Payment Instrument | Input VAT Status |
|---|---|---|---|
| 2 purchases, same vendor (Inv A 2.5M, Inv B 3.0M) | VND 5.5M | Cash for both | 100% disallowed for both invoices |
| 2 purchases, same vendor (Inv A 2.5M, Inv B 3.0M) | VND 5.5M | Inv A: cash; Inv B: bank wire | Inv A disallowed; Inv B fully deductible |
| 3 separate vendors, each invoice VND 4.0M | VND 12.0M | Cash paid to each vendor (below VND 5M) | 100% deductible (distinct sellers) |
| Deferred payment terms, contract above VND 5M | VND 15.0M | Unpaid at the monthly VAT filing date | Temporarily deductible (must wire at maturity) |
For deferred or installment purchases of VND 5 million or more under a written contract, the buyer declares input VAT deductions based on the valid contract and e-invoice. However, if non-cash banking documents are not secured upon contractual maturity, the enterprise must reduce the previously claimed input VAT credits in the tax period in which the payment obligation arises. If the payment document is obtained later, the enterprise may declare and deduct that input VAT again in the period in which it obtains the document (Decree 144/2026/ND-CP, from 20 June 2026).
Financial Exposure, Tax Penalties, and Internal Controls
Settling qualifying invoices of VND 5 million or more in cash creates cumulative financial penalties and operational disruptions during tax audits:
Direct Sanctions and Audit Consequences
- Input VAT Disallowance: All input VAT on non-compliant invoices is rejected, increasing net VAT payable or reducing refundable VAT balances.
- Scrutiny on Corporate Income Tax (CIT) Deductions: From 15 December 2025, Article 9 of Decree No. 320/2025/ND-CP also requires non-cash payment documents for purchases of VND 5 million or more per transaction. A cash payment at that level forfeits the VAT credit, and the expense is not deductible for CIT. Input VAT disallowed for lack of non-cash payment documents is also excluded from deductible CIT expenses (the Law on VAT).
- Under-Declaration Administrative Penalties: Since 1 July 2026, Article 44 of the Law on Tax Administration No. 108/2025/QH15 sets an administrative fine of 20% of the underpaid tax for incorrect filings resulting in tax underpayment (before that date, Decree No. 125/2020/ND-CP applied).
- Late Payment Interest: Tax authorities assess late payment interest at 0.03% per day on overdue tax liabilities under the Law on Tax Administration.
Compliance Alert: Transfers to Personal Accounts of Vendor Executives
If funds go to someone other than the seller, such as the personal account of a corporate vendor's director, and the written contract does not provide for payment to a third party designated by the seller, the transfer may not be accepted as non-cash proof and the input VAT is at risk. Where the seller is a household business or individual, that person's own account is the seller's account.
De Jure Principles vs De Facto Tax Audit Scrutiny
Under the law (de jure), Vietnam operates on a self-declaration and self-assessment tax framework. Taxpayers deduct input VAT without requiring advance approval from local tax bureaus, provided supporting e-invoices and payment slips are maintained.
During actual tax audit examinations (de facto), tax inspectors commonly look at two points:
- Recipient Account Verification: Cross-referencing payee bank details on debit advices against official tax registration databases on the tax authority’s e-invoice portal.
- Payment Reference Specificity: Verifying whether bank transfer memos state exact e-invoice numbers or contract references rather than generic descriptions.
For deeper insights into aligning finance processes with corporate accounting rules, review our Vietnam corporate accounting and reporting compliance analysis.
Actionable Internal Control Solutions for FDI Corporate Treasurers
- Revise Internal Financial Regulations: Reduce departmental petty cash spending ceilings to strictly below VND 5,000,000. Mandate that all operational disbursements equal to or exceeding VND 5 million route through corporate banking accounts.
- Deploy Corporate Credit Cards: Issue corporate credit cards under the enterprise’s legal name to managers and business travel staff, ensuring direct bank settlement for hospitality and logistics.
- Configure ERP and Accounting Controls: Configure enterprise accounting software to automatically block cash disbursement vouchers for invoices of VND 5,000,000 or greater, generating alerts for same-day vendor invoice accumulations.
- Establish Vendor Bank Master Verification: Implement a mandatory vendor onboarding process requiring suppliers to provide bank account confirmation letters bearing their official corporate seal.
Strategic Recommendations for FDI Enterprises
The VND 5 million threshold changes how spending is approved and paid. Foreign-invested enterprises should update approval workflows, vendor payment systems, and documentation procedures.
Keeping the full input VAT deduction depends on treasury, tax accounting, and operations working from the same rules. For advisory support and audit preparation, explore our corporate tax compliance services or contact our CPA practice.
This guide reflects Vietnamese tax regulations under Law No. 48/2024/QH15, Decree No. 181/2025/ND-CP, and Law No. 108/2025/QH15, applicable for the 2026 fiscal year.
