Guidance on Input VAT Deduction for Late Payments – According to Official Letter 5487/CT-CS

Guidance on Input VAT Deduction for Late Payments – According to Official Letter 5487/CT-CS

Do businesses lose the right to deduct input VAT if payments are made after the contractual due date? Updated guidance from Official Letter 5487/CT-CS dated 25 November 2025: Input VAT can be deducted again once payment is made.

Concerns regarding input VAT deduction for late payments have long troubled many businesses, especially amidst recent changes introduced by the 2024 VAT Law and Decree 181/2025/NĐ-CP. However, with the issuance of Official Letter 5487/CT-CS on 25 November 2025, the Tax Authority has provided more flexible and supportive guidance to ease these concerns. 

Previously, several local tax authorities held the view that once the contractual payment deadline had passed without payment, businesses would permanently lose the right to deduct input VAT. This created significant pressure on corporate cash flow.  

Key Update in Official Letter 5487/CT-CS: Input VAT Can Be Reclaimed

According to the latest guidance, the mechanism for handling input VAT on goods purchased on deferred payment terms is applied flexibly in two steps:

Step 1: Reduce input VAT deduction when the payment is overdue

When the payment due date stated in the contract or contract addendum has passed and the business has not yet provided non-cash payment documents, the business is required to make an adjustment to reduce the previously claimed input VAT amount.

Step 2: Increase input VAT deduction once actual payment is made

When the business subsequently makes payment via bank transfer (after the contractual due date), it is allowed to declare and deduct again the corresponding input VAT amount based on the payment made.

Comparison: Previous Risk Interpretation vs. New Guidance