Deferred-Payment and Installment Purchases: Businesses May Lose VAT Input Credit Without Proper Payment Records

22-06-26 MTParners

Decree No. 144/2026/ND-CP, effective from June 20, 2026, tightens the conditions for claiming input VAT credit on goods and services purchased on deferred payment or installment terms — businesses should review their accounts payable and payment documentation procedures now.

From June 20, 2026, Decree No. 144/2026/ND-CP, which amends Decree No. 181/2025/ND-CP on the implementation of the Law on Value-Added Tax, has officially taken effect, introducing stricter conditions for claiming input VAT credit on goods and services purchased on deferred payment or installment terms valued at VND 5 million or more. Businesses must now have a complete set of documents — a written contract, a valid VAT invoice, and non-cash payment evidence issued on time — or they will be required to self-adjust and reduce the input VAT credit already claimed, exposing them to the risk of back-tax assessment and late-payment penalties if payment progress is not closely monitored.

Three mandatory conditions for claiming VAT credit on deferred or installment purchases

Under Article 4 of Decree No. 144/2026/ND-CP, a business purchasing goods or services on deferred payment or installment terms valued at VND 5 million or more may only claim input VAT credit if it holds all three of the following: a written purchase contract; a valid VAT invoice; and non-cash payment evidence corresponding to the deferred or installment amount. This condition has been elevated into a clearer, more specific rule compared to the previous Decree No. 181/2025/ND-CP, aiming to curb the practice of businesses claiming tax credit upfront without actually settling payment as contractually committed.

Credit allowed before the due date, but evidence required once it arrives

A notable feature of Decree No. 144/2026/ND-CP is its “provisional” credit mechanism tied to the contract’s payment schedule. Where the agreed payment date has not yet arrived and non-cash payment evidence is therefore not yet available, the business may continue to claim input VAT credit as normal. However, once the payment date specified in the contract or its appendix arrives and the business still lacks non-cash payment evidence, it must self-declare and reduce the input VAT credit previously claimed for the portion lacking evidence. This shifts the burden of tracking payment deadlines and accounts payable onto the accounting department, rather than a one-time check at the point the invoice is recorded.

Credit may be reclaimed if evidence is supplemented later

The Decree also provides a “restoration” mechanism: if, after making the downward adjustment, the business later obtains the non-cash payment evidence for the previously unsupported amount, it may re-declare and reclaim the corresponding input VAT credit in the tax period in which the evidence arises. This is a favorable feature that prevents businesses from permanently losing their credit entitlement, but it also means businesses may need to amend their tax returns multiple times over the life of a long-term deferred or installment purchase contract.

Scope of application and other related changes

Besides the payment-evidence requirement, Decree No. 144/2026/ND-CP also adds certain items exempt from VAT (such as agricultural insurance and insurance for vessels and equipment used in fishing) and revises the appendix listing exported natural resources and minerals exempt from VAT. However, the new conditions for VAT credit on deferred and installment purchases are considered the most far-reaching change, as they apply to virtually all businesses engaging in credit-based purchases of goods and services — a common practice in B2B transactions.

Practical impact

For businesses that regularly purchase raw materials, machinery, or equipment on deferred payment or installment terms, the new rule requires the accounting department to closely track every payment milestone in the contract, rather than recording the credit only once at the time the invoice is received. The greatest risk is having to repeatedly reduce input VAT credit if non-cash payment evidence is not completed on time, which directly affects cash flow and the amount of tax payable for the period. Businesses that are slow to detect discrepancies may also face the risk of back-tax assessment and penalties during a tax audit or inspection.

Recommendations for businesses

To avoid having input VAT credit disallowed or having to amend tax returns repeatedly, businesses should:

Review all ongoing deferred-payment and installment purchase contracts and build a tracking schedule linking each payment milestone to its corresponding invoice.
Ensure close coordination between the accounting/finance department and the procurement department so that non-cash payment evidence is completed by each contractual deadline.
Update internal procedures and accounting software to automatically flag upcoming payment deadlines that still lack supporting evidence.
For high-value contracts spanning multiple payment periods, consult a lawyer or tax specialist to assess risk and structure payment terms in line with the new regulation.

MT & Partners Law Firm, with a team of experienced lawyers in corporate and tax law, stands ready to assist businesses in reviewing contracts, building compliance procedures, and resolving issues related to VAT input credit. Contact hotline 0987140772 or email info@mtpartners.vn for consultation.

(*) This article is for reference only and does not replace specific legal advice.

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