New Points regarding Conditions for Input Value-Added Tax Deduction under the 2024 Value-Added Tax Law

Value-added tax (VAT) is an important component of Vietnam’s legal tax system, as it has a direct impact on corporate output and economic activities. Among these, input VAT deduction is essential for avoiding double taxation and guaranteeing fair VAT calculation. The 2024 VAT Law, which goes into effect on July 1, 2025, supplements and refines various laws relating to deduction criteria. These new points not only increase transaction transparency but also improve tax administration efficiency and decrease fraud connected to input VAT deductions.

1.What is VAT and input VAT?

VAT is an indirect tax charged on the added value of products and services at each stage of the supply chain, from production to consumption. Although enterprises and suppliers are responsible for declaring and paying VAT, the actual tax burden is paid by the consumer through product and service pricing.

Input VAT is the amount of tax shown on VAT invoices (red copies). This is the tax that enterprises must pay when they buy goods or services for their enterprise operation. If specific legal conditions are met, these enterprises may deduct such input VAT from their total payable VAT.

2.New developments in input VAT deduction conditions

a.Lowering the payment threshold

According to the previous VAT Law (Law No. 13/2008/QH12 and its amendments). To be eligible for input VAT deduction, taxpayers were required to have valid VAT invoices and the purchased goods or services must serve VAT-taxable enterprise activities. Furthermore, for expenses of VND 20,000,000 or more, payment had to be made via bank transfer to eligible for a deduction.

Under the 2024 VAT Law, several new points have been introduced. Notably, the threshold for non-cash payments has been reduced from VND 20,000,000 to VND 5,000,000. This adjustment provides greater flexibility for small and medium-sized enterprises and individual enterprise households, entities that often engage in frequent but low-value transactions.

b.Expanding payment method

Eligible payment methods for VAT deduction have also been broadened. In addition to traditional bank transfers, the new law now recognizes various non-cash payment options. These include e-wallets, electronic payment gateways, QR code payments and transactions through licensed intermediary payment service providers. This shift reflects the legal system’s adaptation to digital transformation and the growth of financial technology.

These new provision demonstrate flexibility and a pragmatic approach that is more in line with actual enterprise conditions. As a result, the modified input VAT deduction requirements under the 2024 VAT Law show significant progress toward keeping up with modern society and economic trends.

3.What should enterprises do to qualify for input VAT deductions?

To claim input VAT deductions, enterprises must retain valid VAT invoices and ensure that the goods or services purchased are directly used for VAT-taxable enterprise operations. For transactions of VND 5,000,000 or more, taxpayers must use eligible non-cash payment methods as stipulated by current regulations, such as bank transfers, e-wallets, QR code payments, or authorized electronic payment gateways. Additionally, enterprises should stay up to date with tax regulations, particularly the provisions of the 2024 VAT Law to avoid disallowance of deductible expenses due to non-compliance.

Besides, establishing a qualified accounting system and utilizing e-invoice software, accounting programs and electronic tax management tools is also essential in current situation. These steps help enhance transparency, accuracy and consistency in cost management and tax compliance.

As such, enterprises must pay attention to payment thresholds, invoicing and payment methods to ensure their legitimate rights while improving operational efficiency and long-term tax compliance.

It is clear that the new points introduced in the 2024 VAT Law especially regarding input VAT deduction conditions reflect the government’s efforts to simplify administrative procedures, embrace digital transformation and respond to the diverse realities of modern enterprise. By lowering the non-cash payment threshold and expanding payment options, the new rules provide needed flexibility while guaranteeing the principles of transparency and effective tax management. Proper implementation of the revised of VAT deduction regulations will yield practical benefits, reduce tax burdens, encourage sustainable and healthy enterprise development in this era of integration and digital advancement.

This article, “New Points regarding Conditions for Input Value-Added Tax Deduction under the 2024 Value-Added Tax Law” is brought to you by TNTP. If you have any questions or require further clarification, please do not hesitate to contact TNTP for timely support.

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