Invoices under 20 million VND must be paid via bank transfer starting from July 1, 2025

Starting July 1, 2025, invoices under 20 million VND paid by bank transfer will be a mandatory requirement for businesses to qualify for VAT deduction. This means that any transaction involving goods or services with an invoice value below 20 million VND must be paid through bank transfer or other recognized cashless payment methods. Cash payments for such invoices will no longer qualify for VAT deduction, even though they may still be legally allowed for the transaction.

This new regulation is part of a broader effort by the Vietnamese government to improve transparency and accountability in financial transactions, reduce tax evasion, and promote digital payments in the business environment.

1. Why Is This Regulation Important?

The requirement for invoices under 20 million VND paid by bank transfer aims to address several key issues:

• Reduce Tax Evasion: Cash payments are harder to trace and can be used to conceal taxable income. By enforcing invoices under 20 million VND paid by bank transfer and other cashless payments, tax authorities can more easily verify transactions.
• Increase Transparency: Electronic payment trails created by invoices under 20 million VND paid by bank transfer make it simpler to audit businesses and ensure compliance with tax laws.
• Facilitate VAT Management: Ensuring payments through bank transfers streamlines VAT deduction claims and reduces fraudulent refund claims related to VAT.

Businesses that fail to comply with the requirement for invoices under 20 million VND paid by bank transfer risk having their expenses disallowed for VAT deduction, resulting in higher tax liabilities.

2. What Does the 2024 VAT Law Say?

According to the amended 2024 Value Added Tax Law, effective from July 1, 2025, all invoices—including those under 20 million VND—must be accompanied by proof of cashless payment to be eligible for VAT deduction. This applies across all business sectors involved in selling goods and services within Vietnam.

The law also enforces strict penalties and prohibits acts such as issuing fake invoices, failing to submit electronic invoice data, and manipulating invoice information. Compliance with the rule on invoices under 20 million VND paid by bank transfer is essential to avoid legal consequences and maintain proper VAT benefits.

3. Are Cash Payments Still Allowed for Invoices Under 20 Million VND?

Yes, cash payments for invoices below 20 million VND remain legally permitted for settling transactions. However, under the new regulation, if payment is made in cash, the invoice will not qualify for VAT deduction. To ensure compliance with the rule on invoices under 20 million VND paid by bank transfer, businesses are encouraged to switch from cash payments to cashless payment methods such as bank transfers, mobile wallets, or other electronic payment options. Adopting invoices under 20 million VND paid by bank transfer helps maintain tax benefits and avoid potential penalties.

4. 8 Prohibited Acts in VAT Deduction and Refund – Pay Attention to Invoices Under 20 Million VND

The 2024 VAT Law defines eight prohibited acts related to VAT deduction and refund that businesses must avoid:

1. Illegal purchase, exchange, or brokerage of invoices.
2. Issuing invoices for fictitious or illegal transactions.
3. Issuing invoices during business suspension, except for contracts signed before suspension.
4. Use of illegal invoices or documents as regulated by the government.
5. Failure to timely transfer electronic invoice data to tax authorities.
6. Altering, misusing, unauthorized access, or destruction of invoice data systems.
7. Bribery or collusion to fraudulently obtain tax deductions or refunds.
8. Collusion between tax authorities and businesses to evade VAT.
9. Understanding and complying with these rules is essential to avoid penalties.

Understanding and strictly complying with these regulations protects businesses from penalties and ensures smooth tax operations.

5. How Should Businesses Prepare?

To fully comply with the requirement of invoices under 20 million VND paid by bank transfer, businesses should:

• Adopt and encourage payment via bank transfers, e-wallets, or other official cashless payment methods.
• Avoid cash payments for invoices intended for VAT deduction.
• Train finance and accounting teams about the new regulations and record-keeping requirements.
• Maintain thorough documentation of all transactions and corresponding cashless payment proofs.
• Regularly update themselves on tax policies and legal changes to avoid unexpected penalties.
• Consult with tax experts or service providers like VINA TPT for guidance and support.

Summary

The regulation requiring invoices under 20 million VND paid by bank transfer starting July 1, 2025, marks a significant shift in Vietnam’s tax and payment landscape. Businesses must adapt by transitioning to cashless payment methods to ensure their VAT deductions are valid and to avoid legal risks. Proper preparation and compliance will help enterprises operate smoothly and benefit from tax incentives. If you need support in reviewing documents or ensuring compliance with this regulation, Vina TPT is ready to help.