Businesses may deduct input VAT when employees use personal accounts to pay expenses, provided that all conditions regarding invoices, documents, and non-cash payment methods are met.
During their operations, businesses may encounter situations where employees use personal accounts to pay for goods and services used for the business's production and business activities, and the business then reimburses the employee for these amounts.
So, in this case, can the business deduct input Value Added Tax (VAT)?
According to current regulations, payment through a personal account does not automatically negate the right to deduct input VAT. However, the business must fully meet the conditions regarding the purpose of using goods and services, invoices, documents, and payment methods as stipulated by law.
According to Clauses 1 and 2, Article 14 of the Law on Value Added Tax 2024, business establishments paying VAT using the deduction method may deduct input VAT for goods and services used for the production and business activities of VAT-taxable goods and services, provided they meet the prescribed conditions.
Some important conditions include:
Having a value-added invoice for purchased goods and services or a VAT payment document as prescribed;
Having non-cash payment documents for purchased goods and services that are required to be paid non-cash;
For exported goods and services, additional specific conditions regarding contracts, invoices, payment documents, customs declarations, and related documents as prescribed must be met.
Thus, determining whether a business can deduct input VAT does not solely depend on whether the payment account is in the name of the business or an individual, but requires considering the entire dossier and actual payment method.
According to Point i, Clause 2, Article 26 of Decree 181/2025/ND-CP, in cases where purchased goods and services serving the production and business activities of VAT-taxable goods and services are authorized to an individual who is an employee of the business for non-cash payment according to the financial regulations or internal regulations of the business, input VAT may still be deducted.
The important condition is:
The employee must be authorized by the business to make non-cash payments, and subsequently, the business must also reimburse the employee using a non-cash payment method.
Therefore, a business may deduct input VAT when an employee uses a personal account to pay expenses for the business, provided that all legally prescribed conditions are met.
According to Article 26 of Decree 181/2025/ND-CP, for purchased goods and services valued at 5 million VND or more, including VAT, the business must have non-cash payment documents.
If the business implements a mechanism where employees make payments on its behalf, the following conditions must be ensured:
Payment by personal account must be made by an individual who is an employee of the business establishment.
The employee must be authorized by the business to make non-cash payments according to the financial regulations or internal regulations of the business.
Therefore, businesses should establish appropriate financial regulations, internal regulations, or authorization documents to serve as a basis for proving that the employee is paying on behalf of the business.
The amount for purchased goods and services must be paid by the employee using a non-cash method as prescribed.
After the employee pays the supplier, the business must reimburse the employee using a non-cash payment method.
This is one of the important conditions to prove the cash flow and the basis of the payment.
To ensure the basis for input VAT deduction, businesses should keep complete records proving the transaction and payment process, including:
Valid VAT invoice for purchased goods and services;
Records and documents proving that the goods and services are used for the production and business activities of VAT-taxable goods and services;
Financial regulations or internal regulations of the business that stipulate the authorization for employees to make payments;
Authorization document or material showing that the employee is assigned by the business to make payments, if any;
Document showing that the employee has made non-cash payment to the seller;
Document showing that the business has reimbursed the employee using a non-cash payment method;
Other documents and records related to the transaction.
Preparing and storing complete records helps businesses prove the validity of the expense and meet the documentation requirements when declaring and deducting tax.
Company A purchases a batch of goods for business operations with a value of 10 million VND, including VAT.
According to Company A's financial regulations, employees are authorized to use personal accounts to pay for purchases serving business operations.
The employee transfers money from their personal account to the supplier. Subsequently, Company A transfers 10 million VND back to the employee's account.
If the transaction has a valid VAT invoice and meets all other conditions for tax deduction as prescribed, this case may qualify for input VAT deduction.
The important point is not whether the initial payment account is a personal account, but whether the individual is an authorized employee of the business, the transaction is paid non-cash, and the business reimburses the employee also by non-cash method, while other invoice and document conditions are met.
Businesses should not assume that all cases where employees use personal accounts for payment will qualify for VAT deduction.
Before declaring deduction, businesses need to check:
Firstly, whether the payer is an employee of the business.
Secondly, whether the payment on behalf of the business is made based on authorization and in accordance with the business's financial regulations or internal regulations.
Thirdly, whether the payment is made by a non-cash method as prescribed.
Fourthly, whether the business reimburses the employee using a non-cash method.
Fifthly, whether the invoice and related documents are complete, valid, and accurately reflect the actual transaction.
If necessary documents or conditions are missing, the business may face risks during tax authority inspections of VAT declaration and input deduction.
Businesses may deduct input VAT when employees use personal accounts to pay expenses for the business, provided that the payment fully meets the conditions stipulated by law.
Specifically, it must be ensured that:
Goods and services are used for the production and business activities of VAT-taxable goods and services;
There are valid invoices and documents;
For transactions from 5 million VND or more including VAT, the non-cash payment requirement is met;
The employee is authorized by the business to make payments according to financial regulations or internal regulations;
The employee makes non-cash payment to the seller;
The business reimburses the employee using a non-cash method.
Therefore, businesses should establish clear payment regulations and reimbursement procedures, and store complete records and documents to ensure the right to deduct input VAT and minimize risks during tax audits and inspections.
If your business is facing issues regarding deductible expenses, VAT deduction, e-invoices, payments via personal accounts, or reimbursement records for employees, OPLAW can assist in reviewing records, assessing risks, and advising on appropriate solutions in compliance with legal regulations.
Note: The content above is compiled based on provided documents, referencing the Law on Value Added Tax 2024 and Decree 181/2025/ND-CP. When applying to actual cases, businesses need to cross-reference the currently effective regulations and the specific status of documents at the time of tax declaration.
Businesses may deduct input VAT when employees use personal accounts to pay expenses, provided that all conditions regarding invoices, documents, and non-cash payment methods are met.
Businesses may deduct input VAT when employees use personal accounts to pay expenses, provided that all conditions regarding invoices, documents, and non-cash payment methods are met.
Businesses may deduct input VAT when employees use personal accounts to pay expenses, provided that all conditions regarding invoices, documents, and non-cash payment methods are met.
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