Input VAT credit in Vietnam: the conditions accounts payable must check before booking an invoice

Input VAT on a purchase is creditable in Vietnam when four things line up: the purchase is used for taxable business activity, you hold a lawful VAT invoice or import documents, the invoice is paid by non-cash means where it is VND 5 million or more, and the invoice is declared correctly. Those conditions come from Law 48/2024/QH15 on Value Added Tax, in force from 1 July 2025, and its implementing decree.

The law is not where most credits are lost. They are lost in accounts payable: an invoice accepted with the wrong buyer details, a payment made by someone other than the company, a supplier whose status changes after the purchase. The checks below are designed to be run at booking, when a problem can still be fixed by asking the supplier for a corrected invoice.

Condition one: the purchase serves taxable activity

Input VAT is creditable only to the extent the purchase is used for supplies that carry VAT, including 0% supplies. Purchases used for activities not subject to VAT do not give a credit. Purchases that serve both need to be apportioned.

For most manufacturing and trading FIEs this condition is easy: everything they sell is taxable. It becomes real in three situations:

• A company that sells taxable goods and also earns interest or other non-taxable income on a material scale.
• A company with a non-taxable business line — some financial, educational or medical services, depending on classification.
• Costs that are personal in nature, such as items bought for an employee's private use, which are not business inputs at all.

Where apportionment applies, the rules prescribe the method; the usual starting point is the ratio of taxable revenue to total revenue. Document the calculation each period and true it up at year end, rather than picking a percentage once and leaving it in the ERP.

Condition two: a lawful invoice or import document

For domestic purchases the document is a Vietnamese e-invoice issued under the invoice rules — Decree 123/2020/ND-CP as amended by Decree 70/2025/ND-CP, and from 1 July 2026 Decree 254/2026/ND-CP. A PDF alone, a foreign-format invoice from a Vietnamese supplier, or a receipt is not enough. For imported goods, the customs declaration and proof of VAT paid at import do the same job.

What accounts payable should check on each e-invoice:

1. Buyer name, address and tax code exactly match the company's registration. A group name or an old address is a common mistake after a restructuring.
2. Description, quantity and price match the purchase order and the goods or services actually received.
3. The VAT rate is right for the item, including any temporary reduction in force for the period.
4. The invoice exists on the e-invoice portal under your tax code. The file you received and the record in the tax authority's system should agree.

If anything is wrong, ask the supplier for an adjusting or replacement invoice under the correction procedure. Do not annotate the original by hand and do not accept a second invoice that simply duplicates the first.

Condition three: non-cash payment for invoices of VND 5 million or more

Law 48/2024/QH15 requires evidence of non-cash payment for purchases where the invoice is VND 5 million or more. That line is lower than under the previous VAT law, so processes built for the old threshold may now leave gaps. The rule looks simple and generates more disallowed credits than any other.

Points that trip FIEs up:

• Who pays. The payment should come from the company's own bank account to the supplier's account. A payment by the parent, a sister company or an employee needs a documented arrangement and is harder to defend.
• Splitting. Several invoices for one purchase, each kept below the line and paid in cash, invite exactly the scrutiny they are meant to avoid. Do not do it.
• Offsetting. Settling payables against receivables, or paying through a third party, can count as non-cash payment only in the forms the rules allow; keep the offset agreement and the reconciliation.
• Credit terms. An invoice not yet paid at the declaration date is a timing question, not an automatic loss. Follow the current guidance on what to do if payment is not made by the due date in the contract.

Condition four: a supplier that is really operating

An invoice is only as good as the supplier behind it. Before paying a new supplier, and periodically for existing ones, check their tax code status on the taxpayer information lookup. Two statuses deserve attention:

A status on its own does not prove an invoice is invalid, and a clean status does not prove a supplier is sound. But an invoice dated after the supplier stopped operating, from a supplier the tax office cannot find, is the classic starting point of a disallowed credit. In July 2026 the tax authority launched a campaign to clean up tax codes, and its review list of that month covered 617,462 enterprises — so supplier statuses are changing more often than usual. Record the check with the date.

Declaring the credit: timing and corrections

Input VAT is declared in the period in which the invoice is received and the conditions are met. If an invoice was missed, it can generally be declared in a later period under the current rules on correction and late declaration rather than lost; check the current guidance for the time limits and the procedure, and keep the explanation on file.

Two habits keep credits clean:

• Monthly reconciliation of the purchase ledger with the invoices listed under your tax code on the e-invoice portal. Differences are either missing bookings, which lose credit, or invoices you do not recognise, which need investigating.
• Payment status on the VAT schedule. Tag each invoice of VND 5 million or more with its payment reference. When the tax office asks, the answer is already in the file.

Imports and services from abroad

For imported goods, VAT paid at customs is creditable with the customs declaration and payment evidence. Keep them with the purchase file, not only in the logistics team's system; audits ask accounting.

For services bought from an overseas supplier without a taxable presence in Vietnam, the Vietnamese company generally withholds and pays VAT under the foreign contractor rules. That VAT is creditable once it has been paid and documented. The credit is often forgotten because the payment runs through a different process — the treasury team pays the foreign invoice, the tax team files the contractor return, and nobody links the two in the VAT schedule.

Employee expenses: travel, fuel and business meals

Expense claims are where the invoice and payment conditions meet day-to-day behaviour, and where many small credits disappear. The Vietnamese company can credit VAT on a staff member's hotel, domestic flight or fuel purchase only when the e-invoice is issued to the company — its name and tax code, not the employee's — and, for amounts of VND 5 million or more, when payment can be shown to come from the company by non-cash means.

• Tell staff before they travel to ask for a company e-invoice at checkout, with the tax code on a card or in their phone. Getting a supplier to reissue weeks later is slow and sometimes impossible.
• Company cards make the payment trail simple. Reimbursing an employee who paid with a personal card or in cash leaves the payment condition hard to meet for larger amounts.
• Expatriate staff often assume a receipt in English from an international hotel chain is enough. For VAT credit in Vietnam it is the Vietnamese e-invoice to the company that counts.
• Business meals and entertainment should be tied to a business purpose in the claim; whether the cost is deductible for CIT is a separate test from whether the VAT is creditable.

If the expense system cannot hold the e-invoice file and the card reference together, fix that first. The accounts payable checks above only work if the documents reach accounts payable.

Where to check your own position

Use the e-invoice portal to see every invoice issued to your tax code, the taxpayer information lookup to check supplier statuses, and your company's e-tax account to confirm the VAT returns filed and the credits carried forward. If the carried-forward balance in the tax authority's records differs from your ledger, find out why before the next refund claim or audit.