Scenario: Company M., a logistics service provider, underwent a tax finalization review for 2025. The tax authority disallowed nearly all of its material purchases and seasonal labor costs from deductible expenses — because everything was backed only by internal payment vouchers, with no valid invoices or documents. The result: back-assessed corporate income tax (CIT), a 20% fine on the underdeclared tax, and late-payment interest of 0.03% per day. The director was stunned: “The spending was real, we have witnesses — why are we being back-taxed?” The answer lies in the three cumulative conditions for deductible expenses under current tax law.
1. How are undocumented expenses treated?
Under Article 9 of the Corporate Income Tax Law 67/2025/QH15 (effective 01/10/2025, replacing Law 14/2008), an expense is deductible in determining taxable income only if it simultaneously meets three conditions:
- It is an actually incurred expense related to the enterprise’s production or business activities;
- It is supported by lawful invoices and documents as prescribed by law;
- For each purchase of goods or services valued at VND 5 million or more (VAT-inclusive), payment must be made via non-cash instruments.
Without an invoice, condition (b) fails. The tax authority will disallow the expense → taxable profit increases → more CIT payable → the enterprise is back-taxed for the shortfall. In addition, because the conduct is classified as underdeclaration leading to tax shortfall (not tax evasion — see section 6), the enterprise also faces:
- A 20% fine on the underdeclared tax amount (Article 16 of Consolidated Document 27/2026/VBHN-ND-BTC — consolidating Decree 125/2020 and its amending decrees);
- Payment in full of the outstanding tax to the state budget;
- Late-payment interest of 0.03% per day on the overdue tax;
- Adjustment of loss amounts and deductible input VAT (if any).
2. Six groups rescued by Form 01/TNDN
Not every invoice-less expense is automatically disallowed. The law permits a purchase list for goods and services bought without invoices (Form 01/TNDN) in place of an invoice for six groups:
- Purchases of agricultural, aquatic and fishery products from the direct producers or catchers;
- Handicraft products made of jute, sedge, bamboo, rattan, straw, coconut shell or materials salvaged from agricultural products, bought from non-business handicraft producers selling directly;
- Soil, stone, sand and gravel bought from households or individuals who self-extract and sell directly;
- Scrap bought from direct collectors;
- Utensils, assets and services bought from non-business households or individuals selling directly;
- Goods and services bought from business households or individuals (other than above) whose revenue is below the VAT-liable threshold.
Three caveats: the list must be prepared together with payment vouchers to the seller and must contain all required information; if the purchase price on the list is higher than the market price at the time of purchase, the tax authority may re-determine it. Form 01/TNDN is not a blanket pass — it rescues only the six listed groups.
3. Valid invoices from 01/7/2026: Decree 254/2026 and Circular 91/2026
From 01/7/2026, the invoice framework changed completely:
- Decree 254/2026/ND-CP on invoices and documents — fully replacing Decree 123/2020/ND-CP and Decree 70/2025/ND-CP;
- Circular 91/2026/TT-BTC guiding Decree 254/2026 — replacing Circular 32/2025/TT-BTC.
Notably, paper invoices printed by the tax authority ceased to be valid from 01/7/2026. Using them for new transactions will not be recognized as lawful documents. This article does not cite Decree 123/2020/ND-CP as a current basis, as that decree has expired.
4. The VND 5 million threshold and non-cash payment: a new rule
A change many enterprises have not yet absorbed: the mandatory non-cash payment threshold has been tightened from VND 20 million down to VND 5 million per transaction (aggregated within a day for the same supplier) under CIT Law 67/2025/QH15. The old VND 20 million threshold (formerly in Article 6.1 of Circular 78/2014/TT-BTC) no longer applies.
The practical risk: paying the same supplier in cash multiple times a day, each below VND 5 million but aggregating above the threshold — the expense still fails the non-cash condition. Accounting teams should review payment procedures now.
5. Action checklist when back-taxed: review, then file supplementally at the right time
- Step 1 — Review all expenses: classify which have valid invoices, which fall under the six Form 01/TNDN groups, and which will certainly be disallowed. Prioritize high-value items.
- Step 2 — Supplement documents: immediately prepare Form 01/TNDN lists for eligible items; request compliant e-invoices under Decree 254/2026 from suppliers for the rest (where still possible); gather non-cash payment vouchers for items of VND 5 million or more.
- Step 3 — File a supplemental return BEFORE the tax authority acts: this step is decisive. Under Article 9.3 of Consolidated Document 27/2026/VBHN-ND-BTC, an enterprise is not subject to administrative tax penalties if it voluntarily files a supplemental tax return and pays the full shortfall and late-payment interest before any of three milestones: (a) before the tax authority announces an inspection decision at the taxpayer’s premises; (b) before the tax authority discovers the issue without an inspection; (c) before another competent authority discovers it.
- Step 4 — Know the supplemental filing deadline: 05 years from the expiry of the filing deadline for the tax period containing the error (Tax Administration Law 108/2025/QH15, effective 01/7/2026, replacing Law 38/2019 — the old 10-year rule no longer applies).
- Step 5 — Know the penalty limitation period: 05 years (Article 8.2(b) of Consolidated Document 27/2026, amended by Decree 310/2025/ND-CP). Beyond it, no administrative fine applies, but the enterprise must still pay the full tax shortfall plus late-payment interest.
- Step 6 — If disputing the assessment: the enterprise may lodge a complaint. Note: while the complaint is pending, the assessed tax, interest and fines must still be paid in full and on time — unless a decision suspending enforcement has been issued.
6. Underdeclaration vs. tax evasion: do not scare yourself
Undocumented expenses in ordinary business operations are classified as underdeclaration leading to tax shortfall — Article 16 of Consolidated Document 27/2026 (20% fine). This is distinct from tax evasion under Article 17 (fine of 1 to 3 times the evaded tax; criminal prosecution under Article 200 of the Penal Code if criminal elements are present). Being back-taxed does not mean being labeled a tax evader or facing criminal charges — mislabeling only causes panic and wrong moves.
FAQs
We have internal payment vouchers and witnesses but no invoice — is the expense deductible?
No, unless it falls within the six Form 01/TNDN groups and the enterprise has prepared the list in the prescribed form with payment vouchers. Internal vouchers and witness statements do not substitute for lawful invoices and documents.
Is paying VND 4.9 million in cash several times a day to the same supplier risky?
Yes. The VND 5 million threshold is aggregated within a day for the same supplier. If the daily aggregate exceeds VND 5 million and is paid in cash, the expense fails the non-cash payment condition.
What if more than 5 years have passed since the erroneous finalization period?
Once the 05-year penalty limitation expires, no administrative fine applies, but the enterprise must still pay the full tax shortfall and late-payment interest if discovered.
Can we still avoid the fine by filing supplementally after the tax authority has announced an inspection?
No. The penalty shield in Article 9.3 of Consolidated Document 27/2026 applies only when the supplemental filing and full payment are made before the tax authority announces the inspection decision at the premises. After that milestone, the 20% fine still applies.
Legal sources
- Corporate Income Tax Law 67/2025/QH15 (effective 01/10/2025, replacing Law 14/2008): Article 9 (deductible expense conditions); the VND 5 million/transaction non-cash threshold (tightened from VND 20 million under former Article 6.1 of Circular 78/2014/TT-BTC).
- Tax Administration Law 108/2025/QH15 (effective 01/7/2026, replacing Law 38/2019): 05-year supplemental filing window; 0.03%/day late-payment interest.
- Decree 254/2026/ND-CP (effective 01/7/2026): invoices and documents; fully replacing Decrees 123/2020/ND-CP and 70/2025/ND-CP; tax-authority-printed paper invoices no longer valid.
- Circular 91/2026/TT-BTC (effective 01/7/2026): guiding Decree 254/2026; replacing Circular 32/2025/TT-BTC.
- Consolidated Document 27/2026/VBHN-ND-BTC (issued 27/8/2026, consolidating Decrees 125/2020, 102/2021, 310/2025, 291/2026): Article 16 (underdeclaration — 20% fine); Article 17 (tax evasion); Article 9.3 (no penalty for voluntary supplemental filing before 3 milestones); Article 8.2(b) (05-year penalty limitation, amended by Decree 310/2025/ND-CP).
- Decree 320/2025/ND-CP (effective 15/12/2025): guiding the 2025 CIT Law.
Has your company just received a back-tax assessment, or are you concerned about undocumented expenses in your books? Reach us via the Contact page of FLAT Law Firm for an expense review, risk assessment and compliant handling before the tax authority steps in.
The legal content of this article was reviewed by FLAT’s AI Legal Council and submitted to the owner for approval; it is not an opinion of a licensed lawyer and does not replace legal advice for specific cases.
For reference only, not legal advice.