Attention Businesses: Delayed Payments to Suppliers May Lead to Loss of VAT Deduction Rights!

In business, many companies consider deferred or installment payments as a way to manage cash flow. However, under Decree 181/2025/NĐ-CP, recently issued, improper deferred payments can become a “VAT trap” that causes significant financial losses.

Common deferred/ installment payment situations in business include:

1. Purchasing raw materials and input goods.
2. Purchasing machinery, equipment, and fixed assets: often paid in installments or multiple stages, usually large amounts.
3. Transportation, logistics, and warehousing services: typically billed monthly/quarterly, often delayed due to reconciliation of receivables/payables.
4. Outsourced services (IT, marketing, HR, security, cleaning, etc.): usually under long-term contracts with periodic payments.
5. Construction, repair, or project works: paid in stages (advance, partial acceptance, final settlement). Very prone to delays if funding is insufficient or settlement is not completed.
6. Leasing contracts (offices, factories, vehicles, machinery): usually paid quarterly or annually.

These transactions are typically valued above VND 5 million and involve VAT invoices. Therefore, late payments can easily result in the loss of input VAT deduction.

According to Decree 181/2025/NĐ-CP (effective from July 1, 2025):

“g) With regard to goods and services purchased under a deferred payment plan or installment plan with a value of 05 million VND or more, the business establishment shall deduct input VAT according to the sales contracts, VAT invoices, proofs of cashless payment for these purchases. If proofs of cashless payment are not ava

ilable before payment is due according to the contract of appendices thereof, the business establishment may still deduct input VAT.

In cases where the business establishment does not have proofs of cashless payment when payment becomes due according to the contract of appendices thereof, the business establishment shall reverse the deduction of VAT on the value of goods and services without proofs of cashless payment in the tax period in which payment is due..”

This means: for purchases of goods/services with VAT invoices valued at VND 5 million or more, a business must have:

1. A valid VAT invoice.
2. Non-cash payment evidence (bank transfer, offsetting receivables/payables, payment order, etc.).
3. If the payment due date has not yet arrived under the contract/addendum, the business may still deduct input VAT.

However, once the due date arrives and the business has no non-cash payment documents, it must adjust and reduce the deducted input VAT in the tax return for that period.

Furthermore, under Official Letter No. 434/VLO-QLDN2 dated 21/08/2025:
If a company purchases goods/services on deferred payment terms, and at the due date it lacks non-cash payment documents and has already adjusted to reduce previously deducted VAT, but later (after the contractual due date) obtains non-cash payment evidence, such payments still cannot be used to reclaim VAT deduction rights.

Impacts of Late Payments:

1. Loss of Input VAT Deduction.
   • Without bank transfer evidence at the due date, related VAT will be excluded from deductible amounts. Even if paid later by non-cash means, deduction is not reinstated.
   • Businesses must declare adjustments to reduce VAT on Form 01/GTGT.
2. Risk of Tax Reassessment & Penalties.
   • Subject to tax reassessment and late payment interest.
   • Tax return errors and non-compliance risks.
3. Cash Flow & Financial Burden.
   • Losing VAT deduction increases costs and reduces cash flow efficiency.
   • Frequent late payments weaken financial advantages and competitiveness.

Recommendations for Businesses and Accountants:

• To avoid losing input VAT: for purchases worth VND 5 million or more with deferred/ installment terms (payment date differs from invoice date), ensure contracts clearly specify payment deadlines, and payments are made within contractual terms.
• Track receivables/payables in detail by contract and addendum to monitor due dates.
• Prepare payment documents on time (bank transfer slips, bank statements, offsetting agreements, etc.) before deadlines.
• Coordinate with purchasing/management to plan timely payments for large contracts.
• Maintain a due-date alert list to manage debts proactively and avoid VAT disallowances.
• If unable to pay on time → negotiate and sign a contract addendum with the supplier to legally extend payment terms, preserving VAT deduction eligibility.

Late payments no longer just affect supplier relationships — from July 1, 2025, they also mean losing VAT deduction rights. A single overdue debt can turn into a real cost. Proper debt management allows businesses to protect tax benefits, optimize cash flow, and strengthen business credibility.