Decree 144/2026/ND-CP: New VAT Input Tax Credit Rules for Deferred and Installment Purchases — What Businesses Must Do Before 20 June 2026

08-06-26 MTParners

20 June 2026 marks the effective date of Decree 144/2026/ND-CP — a significant amendment to Vietnam’s Value Added Tax (VAT) regulations that directly affects businesses purchasing goods and services on a deferred or installment basis. Rather than rigidly requiring proof of payment before allowing input VAT deduction, the new rules introduce a three-step process that is more flexible yet demands closer internal monitoring. This is a practical change that every corporate accountant must act on immediately.

I. Why the Amendment Was Needed — A Long-Standing Practical Problem

Under Decree 181/2025/ND-CP, which guides the VAT Law 2024, claiming input VAT deductions on goods or services valued at VND 5 million or more requires non-cash payment documentation. This created a serious practical problem: businesses that purchased equipment or raw materials on multi-instalment contracts could not produce payment records for instalments not yet due — resulting in legitimate transactions being denied VAT deductions.

Decree 144/2026/ND-CP, effective 20 June 2026, directly addresses this legal gap by inserting a new provision at Point g, Clause 2, Article 26 of Decree 181/2025/ND-CP.

II. The New Three-Step VAT Deduction Process for Deferred/Installment Purchases

From 20 June 2026, input VAT on deferred or installment purchases valued at VND 5 million or more is handled as follows:

Step 1 — Provisional Deduction: Businesses may claim input VAT in the tax period in which the invoice is issued, even if payment has not yet been made. Requirements: (i) a written purchase contract and (ii) a valid VAT invoice. No payment receipt is needed if the instalment due date has not yet arrived.
Step 2 — Downward Adjustment on the Due Date: When the payment due date specified in the contract or addendum arrives, if the business does not have non-cash payment documentation, it must file a downward adjustment to reduce the previously deducted input VAT for the unpaid portion — in the tax period in which that payment obligation falls due.
Step 3 — Reinstating the Deduction Upon Receipt of Payment Proof: After the downward adjustment is made, if the business subsequently obtains non-cash payment documentation (e.g., a bank transfer receipt, offset agreement), it may reclaim the corresponding input VAT deduction in the tax period in which the documentation is received.

In addition, Decree 144/2026/ND-CP updates the list of insurance products exempt from VAT and revises the schedule of exported natural resources and minerals that are not subject to VAT — businesses in insurance and mining sectors should review the new annexes carefully.

III. Practical Impact on Businesses

The new rules affect virtually all businesses that procure machinery, equipment, or raw materials on deferred or instalment terms. The most affected sectors include construction, manufacturing, retail, trade, agriculture, and technology.

Positive aspects:

Businesses may deduct input VAT from the moment goods and invoices are received, without waiting for full payment — improving cash flow, especially under long-term contracts.
Resolves a long-standing obstacle for industries with extended payment cycles, such as construction and industrial real estate.

Points requiring caution:

If a payment due date passes without a bank transfer record, a downward adjustment is mandatory — potentially triggering late payment interest if a tax liability already exists in that period.
Each contract instalment must be monitored: even a single cash payment for one instalment can cause permanent loss of the VAT deduction for that portion without supplementary documentation.
Businesses with multiple deferred contracts will face increased monthly accounting workloads.

IV. Recommendations for Businesses

To proactively comply with the new rules and avoid tax reassessment risks, businesses should take the following four steps before 20 June 2026:

First, review all active deferred/instalment purchase contracts to identify payment due dates from 20 June 2026 onwards and create a dedicated tracking schedule.
Second, set up automatic reminders (in accounting software or calendar systems) for each contract’s payment due dates to avoid missing mandatory downward adjustments.
Third, prioritise bank transfers over cash for all transactions of VND 5 million or more to preserve the right to claim input VAT deductions.
Fourth, for new contracts signed from 20 June 2026, explicitly specify non-cash payment methods in the contract terms to prevent disputes and tax risk.

MT & Partners Law Firm, with a team of experienced lawyers specialising in corporate law and tax advisory, is ready to assist businesses in reviewing contracts, accounting processes, and compliance strategies under the new regulations. Contact us at hotline 0987140772 or email info@mtpartners.vn.

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

Keywords: VAT installment deferred payment 2026, Decree 144/2026/ND-CP, input VAT deduction installment purchase, new VAT rules June 2026, non-cash payment documentation Vietnam, VAT Law 2024, business installment purchase VAT, downward VAT adjustment, Vietnam corporate tax compliance