From July 1, purchases under 20 million are not tax deductible if paid in cash.

Transactions under 20 million are no longer tax deductible if paid in cash

From July 1, 2025, the Law on Value Added Tax 2024 (No. 48/2024/QH15) officially takes effect.

According to the provisions of the Law on Value Added Tax 2024, from July 1, 2025, all expenses for purchasing goods and services, including transactions with a value of less than 20 million VND, will only be deductible for input VAT if there is a non-cash payment document, except for some special cases as prescribed by the Government .

This provision is stated in Point b, Clause 2, Article 14 of the Law on Value Added Tax 2024, aiming to increase transparency in trading activities, limit the use of cash in commercial transactions and prevent tax fraud.

This is an important change compared to current regulations. Previously, according to the Law on Amendments and Supplements to a Number of Articles of the Law on Value Added Tax in 2013, taxpayers were still allowed to deduct input VAT on goods and services purchased at a time with a value of less than 20 million VND without requiring non-cash payment documents.

But from 1 July 2025, this exception will no longer apply. This means that all transactions, large or small, must be made via non-cash payment methods such as bank transfers, e-wallets or other valid payment methods, if they want to deduct input VAT.

VAT deduction method

According to Article 11 of the Law on Value Added Tax 2024, the VAT deduction method is determined as follows:

VAT payable = Output VAT - Deductible input VAT.

Output VAT is the total VAT recorded on the invoice for selling goods and services.

In case the invoice price includes tax, the output tax will be determined by: Payment price - Taxable price excluding VAT.

Deductible input VAT is the total tax amount stated on input VAT invoices and VAT payment documents of imported goods or services purchased from abroad, if all conditions under Article 14 of the Law on Value Added Tax 2024 are met.

Note, the tax deduction method applies to business establishments that fully implement accounting, invoice and voucher regimes and fall into one of the following cases:

- Business establishments with annual revenue from selling goods and providing services of 1 billion VND or more (except for households and individual businesses);

- Business establishments voluntarily apply the deduction method (not applicable to households and individual businesses);

- Foreign organizations and individuals providing goods and services for oil and gas exploration, survey, mine development and exploitation activities, when taxes are declared, deducted and paid by the Vietnamese party on their behalf.

(According to Vietnamnet)

Source: https://baoyenbai.com.vn/12/351470/Tu-17-mua-hang-duoi-20-trieu-khong-duoc-khau-tru-thue-neu-thanh-toan-tien-mat.aspx