INSTRUCTIONS FOR PROOFS NON-CASH PAYMENT FOR INPUT VAT DEDUCTION

In addition to lawful value-added tax (VAT) invoices, non-cash payment documents for purchased goods and services are a condition for input VAT deduction. To ensure smooth implementation of procedures, enterprises need to clearly understand the regulations related to proofs payment. Then, which proofs non-cash payment are accepted for input VAT deduction?

For input VAT deduction, it is necessary to satisfy the regulations on proofs non-cash payment

Conditions for proofs non-cash payment for purchased goods and services are specified as follows, pursuant to Clause 10, Article 1, Circular 26/2015/TT-BTC:

Proofs non-cash payments for the purchases (including imported goods) that cost VND 20 million or more, except for the imports that cost below VND 20 million each, purchases that cost below VND 20 million inclusive of VAT, and imports being gifts, donations from overseas entities.

Noted that, then the total value of multiple purchases, each of which costs below VND 20 million, that are made in the same day is VND 20 million or more, tax shall only be deducted if bank transfer receipts are presented. The supplier is a taxpayer that has a TIN and pay VAT directly.

In case the taxpayer has financially dependent stores that use the same TIN and invoice form, if the invoice shall have the text “Cửa hàng số:” (“Store No.”) to differentiate the taxpayer’s stores and bears the seal of each store, then each store shall be considered a supplier.”

Receipts for non-cash payments include bank transfer receipts and other receipts for non-cash payments

Receipts for non-cash payments for input VAT deduction

Bank transfer receipts are documentary evidence proving the transfer of money from the buyer’s account to the seller’s account (both accounts are already registered or notified to tax authority).  The buyer is not required to register notify the tax authority of its loan accounts at credit institutions used for paying suppliers opened at providers of payment services under legitimate payment methods.

The legitimate payment methods include checks, payment orders, cash collection orders, bank cards, credit cards, SIM cards (digital wallets), and other means of payment as prescribed (including the case in which the buyer transfers money from the buyer’s account to the seller’s account in the name of a private company’s owner or from the buyer’s account in the name of a private company’s owner to the seller’s account if such accounts have been registered for with tax authorities).

Specific regulations are as follows:

– Proofs of the buyer’s payment to the seller’s account or proofs of payments in the manners that are not conformable with applicable regulations of law are not eligible for deduction and refund of VAN on purposes that cost VND 20 million or more.

– Any purchase that cost VND 20 million or more (VAT-inclusive) shall not be deducted if there is no bank transfer receipt.

– With regard to goods purchased under a deferred payment plan or instalment plan that cost VND 20 million or more, the taxpayer shall declare and deduct input VAT according to the sale contracts, VAT invoices, and bank transfer receipt, If the bank transfer receipt is not available before the payment deadline according to the contract, the taxpayer may still deduct input VAT.

Where the taxpayer does not have bank transfer receipts when making payments, the taxpayer shall declare a reduction of deducted input VAT on the value of goods/services without bank transfer receipts in the tax period during which the cash payment is made (even if the tax authority and competent authorities have decided an inspection of the tax period in which VAT is declared and deducted.

 Other cases in which non-cash payments for input VAT deduction

– If goods and services are purchased by offsetting their value against the value of sold goods and services, or by lending goods under contracts, a certification of this kind of transaction and data comparison record made by both parties is compulsory.

If the payment is offset against third party’s debt, a debt offsetting record made by all three parties is compulsory.

– If the contract allows goods and services to be purchased on credit in the forms of loans or debt offsetting via a third party, it is required to have the loan contract and the receipts for transfer of money from the creditor’s account to the debtor’s account, even when the value of purchased goods and services is offset against the amount paid by the buyer on behalf of the seller or the amount provided for the buyer by the seller.

– If a third party is authorized to receive the payment for purchases by bank transfer (including the case in which the seller requests the buyer to wire the payment to a third party appointed by the seller), this authorization must be agreed in the contract, and the third party must be a lawful legal person or natural person.

After the payment is made this way, if the remaining value that is paid in cash is VND 20 million or more, tax shall only be deducted if bank transfer receipts are presented.

– If payment for purchases is wired to a third party’s account at a State Treasury, which is opened to enforce money collection, input VAT may be deducted.

>> PROCEDURES OF PERSONAL INCOME TAX REFUND https://linconlaw.vn/procedures-of-personal-income-tax-refund/

>> PROCEDURES FOR RE-ISSUANCE OF TAX REGISTRATION CERTIFICATE https://linconlaw.vn/procedures-for-re-issuance-of-tax-registration-certificate/