Executive Summary

Effective from 1 July 2025, companies and businesses are allowed to appoint authorised employees to fulfill payment obligations on behalf of the company. This comes from Decree 181/2025/ND-CP, which also provides VAT deductions for business transactions fulfilled via non-cash payment methods, and whose value is minimally 5 million VND. This provides cost savings for companies, allowing them to increase profits or take on a larger expenditure volume. Companies facing liquidity constraints can also make use of the newly provided operational flexibility to capitalise on business opportunities and maintain business relations.

Policy Intention

Supporting Business Operations

Decree 181/2025/ND-CP allows businesses to facilitate a larger range and volume of business transactions. Businesses facing liquidity constraints can rely on authorised employees to fulfil payments first, then reimburse them later. This provides businesses with flexibility, and more breathing room when cash on hand is insufficient.

Shift Towards Cashless Transactions

Transactions are only eligible for VAT deductions if payment was fulfilled via non-cash methods. This deliberate design reflects the government’s intention to nudge companies and businesses to adopt cashless, and therefore, digital means of payment.

Increased Transparency & Accountability

Digital transactions and payments leave behind digital records, on both ends of payer and receiver. This allows authorities to verify that transactions were carried out properly, and increases transparency. With this, authorities can exercise stricter control and better prevent tax fraud and fictitious invoices. A secondary effect of the policy is that it gives recognition and legitimacy to a diverse range of commercial transaction practices, such as:

1. Debt offsetting
2. This-party payments
3. Employee payment authorisation

This shows that the law is willing to recognise a wider range of business practices, provided that businesses retain proper documentation.

Key Regulation Provisions

Eligibility Requirements for VAT Deductions on Transactions

Transactions whose value is at least 5 million VND are eligible for VAT deduction, provided that proper documentations are in place, for verification purposes. Payments must be fulfilled via non-cash methods, and non-cash payment vouchers and other supporting documents as required by the regulations must be presented. Transaction types include:

1. Domestically purchased goods and services
2. Imported goods and services
3. Deferred payments and installment payments
4. Debt clearing transactions
5. Payment by authorised employees
6. Other types of payment transactions that arise in the course of business operations.

Transactions with Mixed Methods of Payments

Some transactions may be negotiated to be fulfilled with cash and non-cash payments. The portion fulfilled via non-cash payments will be eligible for VAT deductions, provided it is at least 5 million VND, and accompanied by proper documentation. The portion fulfilled via cash payments will not be eligible for VAT deductions, even if they are at least 5 million VND.

Payment by Authorised Employees

As mentioned earlier, companies can make use of authorised employees to complete payments for business transactions. These payments must be made from the authorised employee’s personal account or personal bank cards. Reimbursement by the company must be made from the company’s bank account to the employee’s personal account and must be in accordance with the company’s payment regulations (if any). Reimbursed funds are eligible for VAT deductions, provided that:

1. Payment by the employee on behalf of the company was conducted via non-cash methods.
2. Transaction value is at least 5 million VND
3. Proper documentation is provided for the payment and reimbursement transactions (such as: Authorization letter from the company for an individual to make payments, a proposal from the individual specifying the content, purpose, expected value and reason, non-cash payment vouchers for transactions over 5 million VND and a valid invoice)

Written Power of Attorney

If companies want to make payments via authorised employees, these authorised employees must be given written proof of the power of attorney. Written power of attorney must state the scope of authority given, validity period of authorisation, and must contain the legal representative’s signature. Additionally, the power of attorney given must be in line with the company’s charter and internal financial regulations (if any).

Documents Required

Proper documentation is required for companies to claim VAT deductions. Improper documentation may affect the claim’s eligibility. The documents include:

1. Non-cash payment vouchers
2. Purchase contracts
3. Bank transfer records
4. Payment records
5. Written power of attorney (where applicable)
6. Reimbursement records (where applicable)
7. Debt clearing records (where applicable)

Special Cases Eligible For VAT Deduction

Debt Clearing & Offset Arrangements

When buyer and seller parties both owe debts to each other, both parties may decide to just cancel the debt, through debt clearing or offset arrangements. Businesses claiming VAT deduction must provide:

1. Contractual records for value of goods and services transacted
2. Contractual provisions for debt clearing as an accepted payment method
3. Records of debt comparison
4. Record of debt clearing

Payment Arrangements Involving Third Parties

Transacting parties may settle debts via a third party. For example, the buyer may borrow money from a third party to fulfil payments. In such an instance, documentation required are:

1. Contractual provisions for debt clearing via a third party as an accepted payment method
2. Agreements between involved parties
3. Documentation for borrowed funds from the third party
4. Payment voucher from the lender’s (third party) account

In other cases, the seller may instruct the buyer to direct payment towards a third party, rather than the seller themself. Documentation required are:

1. Document specifying that the seller has appointed the third party to receive payments
2. Third party is an organisation or natural person
3. Third party is compliant with the law

The buyer and seller may also agree to use account(s) opened by the State Treasury as a third party. This method is allowed, and is eligible for VAT deductions.

Payment Made Via Stocks or Bonds

Stocks and bonds are an accepted payment method for goods and services purchased. Documentation required are:

1. Contractual provision that payment via stocks and bonds are an accepted payment method
2. Records of the transfer of stocks or bonds as payment

Deferred or Installment Payment

Documentation required are:

1. Written contracts on the purchase of goods and services
2. Value-added invoices
3. Non-cash payment vouchers

If the contractually specified time for non-cash payment has not yet arrived, involved parties can still input value-added tax deduction, even without payment vouchers.

If the contractually specified time for non-cash payment has already arrived, and the involved parties still do not have the non-cash payment vouchers, the parties can still claim VAT deduction, but must adjust downward accordingly.

Imported Goods & Services Worth Less than 5 Million VND

Goods and services purchased from overseas, with invoices of less than 5 million VND at the VAT-inclusive price are still eligible for VAT deduction. Overseas sellers do not need to provide payment vouchers of purchased goods and services.

Multiple Transactions in the Same Day

If there are multiple transactions, each with a value less than 5 million VND, they are still eligible for VAT deduction if the total value of all transactions are  less than 5 million VND. These transactions must be within the same day, and payment fulfilled via non-cash methods.

Next Steps

Revising Contractual Agreements

Businesses and companies should review ongoing contractual obligations and unfulfilled payments. Where prior agreements and provisions only allow for cash payment, businesses should negotiate with their counterparts to allow for non-cash payment methods. This will benefit all parties involved.

Adapting Internal Payment Processes

Businesses should establish internal payment authorisation regulations, where it is lacking, and should they wish to authorise employees to make payments on behalf of the company. Additionally, the policy reflects the government’s intention to achieve higher levels of accountability and transparency through the proper keeping of financial records. Businesses should react accordingly, by ensuring that all transactions are accompanied by complete and valid invoices. Beyond that, businesses should also identify risks and develop solutions for transactions that do not meet the legal requirements.

Review Compliance Costs

While the VAT deductions can bring significant cost savings to companies, storing and preparing the required documentation can increase man hour costs. Smaller companies may find their internal accounting departments stretched thin. Additionally, documentation and regulation complexity may create more burdens for companies that outweigh the cost savings from VAT deductions. Outsourcing accounting work to external service providers may be the most cost efficient approach.

Conclusion & Recommendations

The government’s newly rolled out 181/2025/ND-CP is a double edged sword that provides cost savings to businesses through VAT deductions, and also gives legitimacy to a wider range of business transacting methods, thereby improving operational flexibility for businesses. The key requirement of the regulation is to push for greater accountability and transparency in business operations, by requiring businesses to provide proper documentation in order to claim VAT deductions. Businesses should respond accordingly by performing their due diligence in keeping proper and detailed records. The secondary response is to make the shift towards non-cash payment methods when completing business transactions, in order to benefit from the tax deductions. Given that the government is taking steps to promote accountability and transparency, it can be assumed that in the near future, the government may perform audits to ensure that businesses comply with the law. Businesses that fail to keep proper records and accounts are likely to come under unwanted scrutiny for fraud or financial crimes. Adapting to Decree 181/2025/ND-CP requires timely action on your internal payment processes, contracts, and documentation practices. If your team needs support reviewing compliance readiness or restructuring payment workflows under the new rules, Viettonkin Consulting’s legal and advisory team is available to assist. Reach out to us for a consultation tailored to your business situation.

Read more: Key Recommendations Directed at Central Policymakers