Invoices over 10 million VND paid through bank are eligible for VAT deduction

For purchase invoices over 10 million VND, the Ministry of Finance is proposing to only allow VAT deduction as an expense if the business pays through a bank.

According to current regulations, if invoices over 20 million VND are to be included in the cost to deduct input Value Added Tax (VAT) when calculating income tax, businesses must pay through the bank. However, this "limit" of 20 million VND can be lowered to 10 million VND, according to a recent proposal by the Ministry of Finance to promote cashless payments.

Businesses must pay through the bank for invoices over 10 million if they want to deduct tax. Photo: AQ

Specifically, the Ministry of Finance proposed to regulate the condition for input VAT deduction as having non-cash payment documents from the level below 20 million VND to the level below 10 million VND.Thus, all costs of purchasing goods and services of the enterprise in cash if over 10 million will no longer be deductible.

According to the explanation of the Ministry of Finance, this proposal aims to "promote non-cash payments and prevent fraud in VAT deductions and refunds, and prevent money laundering".

The drafting agency also explained that most of the places providing goods and services already have card acceptance devices and allow customers to make cashless payments when purchasing goods. Therefore, to continue implementing the Prime Minister's Decision approving the Project on developing cashless payments in Vietnam for the period 2016 - 2020 and contributing to the transparency of business transactions, this proposal was made.

Previously, at the Vietnam Electronic Payment Forum (VEPF) 2015, this idea was mentioned by the leaders of the Ministry of Finance and received much support from experts to limit cash as well as tax fraud. At that time, Deputy Minister Do Hoang Anh Tuan even proposed to lower the deductible expenses of enterprises to 5 million VND instead of 20 million VND as present. According to him, this will be the strongest tool to promote electronic payments because in terms of technology, Vietnam's payment infrastructure already allows this.

According to VNE