Problem input invoices in Vietnam: what to do when a supplier absconds or ceases operations
The short answer
When a supplier absconds or ceases operations, the decisive question is whether the invoice was issued before or after the point at which the tax authority determined that the seller had absconded or stopped using invoices.
Invoices issued after that point are treated as unlawful. The buyer cannot credit the input VAT, cannot deduct the expense, and may be penalised.
Invoices issued before that point are not automatically disallowed. If the buyer can prove the transaction was genuine (contract, delivery, bank payment, full accounting records), its right to credit and deduct remains protected.
The Tax Department has also confirmed, in Official Letter No. 6936/CT-QLTT of 18 September 2026, that a seller being flagged as risky, leaving its address or being dissolved is not in itself grounds to conclude that the buyer has committed a violation.
Why is this a perennial risk in Vietnam?
Each year, thousands of companies are flagged by the tax authority as "not operating at the registered address" or as showing signs of invoice trading. Most of their customers bought real goods and paid real money. Even so, those customers face requests for explanations, suspended credits or disallowed expenses.
With e-invoicing and connected databases, the tax authority now identifies risky links far faster than before. This will not change from year to year, and will intensify as tax administration relies more and more on data. Managing problem input invoices is therefore a long-term compliance capability, not a one-off exercise.
Common scenarios
Scenario | Typical consequence | Response |
Invoice issued after the seller was notified as absconded or barred from using invoices | Unlawful invoice: no credit, no deduction, possible penalty | File an amended return reducing the claim. Engage the seller (if reachable). Assess recovery of the payment |
Invoice issued before that point, not yet claimed | The tax authority may ask the buyer to suspend the claim pending verification | Prepare evidence that the transaction is genuine and request verification |
Invoice issued before that point, already claimed | The tax authority asks for explanations or an adjustment | If the buyer stands by the transaction: give a written undertaking and provide evidence for the authority to audit and conclude |
The seller is only "flagged as risky", with no conclusion | Information for risk management | Under Official Letter 6936/CT-QLTT, an alert does not mean the transaction is fictitious. The buyer keeps its right to credit if it can prove the transaction |
A competent authority has concluded that the invoices are unlawful | Credit and deduction disallowed | Assess whether the buyer can show the fault lies with the seller, so the conduct is treated as an incorrect declaration rather than evasion |
A "defence file" for every transaction
The best defence file is created when the transaction takes place, not when the tax authority starts asking questions. For each supplier, especially new or high-value ones, the business should keep:
Supplier file: registration details, tax code status at the time of the transaction (a screenshot of the lookup), actual address and contact person.
Transaction documents: contract, purchase order, quotation, delivery note, warehouse receipt and transport documents.
Payment records: bank payment orders and statements showing payment to the seller's own account.
Evidence of use: goods put into production or resold, or services received with tangible results.
An important point: bank payment is necessary but not sufficient. The tax authority looks at the flow of goods and the flow of money together. Payment to an account not in the seller's name, or funds circling back to the buyer, are serious red flags.
Process on receiving a tax authority notice
Establish the timing. Compare each invoice date with the date on which the tax authority determined that the seller had absconded, ceased operations or stopped using invoices.
Group the invoices. Separate those issued after that date (hard to defend) from those issued before (defensible).
For the hard-to-defend group: file amended returns proactively to limit penalties and late-payment interest. At the same time, assess the right to recover payments from the seller.
For the defensible group: build the evidence file. Submit a written explanation within the required time (10 working days for an explanation request under Circular No. 89/2026/TT-BTC), citing Official Letter 6936/CT-QLTT.
If penalised: consider grounds for complaint. Where the buyer can show the fault lies with the seller and has fully recorded the transactions, the rules on administrative tax penalties allow more lenient treatment than tax evasion.
Illustrative case
Company P bought scrap steel from a trading company over eight months, worth VND 6 billion in total. In the ninth month, the supplier was notified by the tax authority as "not operating at the registered address". Three invoices worth VND 700 million in total were issued after that notice, because the seller kept invoicing.
Company P responded as follows:
The 3 invoices issued after the notice: it proactively reduced its input VAT claim and removed them from deductible expenses, and sent the seller a written demand for repayment.
The remaining invoices (VND 5.3 billion): it prepared a file containing the contracts, weighing tickets, warehouse receipts, payment orders to the seller's own account and records of the material's use in production.
After its audit, the tax authority accepted the credit and deduction for the VND 5.3 billion. Because Company P had corrected the indefensible portion itself, it was not found to have evaded tax.
Prevention: five habits worth keeping
Check the supplier's tax code status before signing and periodically during the relationship.
Be wary of trading intermediaries without warehouses, vehicles or staff proportionate to the volume of business.
Pay only into bank accounts in the seller's name.
Set up internal alerts when a supplier's status changes on the tax system.
Keep transaction files electronically, organised by supplier, at least for the full amendment window and the limitation period for tax matters.
FAQs
If a supplier absconds, are its earlier invoices disallowed?
Not automatically. Invoices issued before the tax authority determined that the seller had absconded remain creditable and deductible if the buyer can prove the transaction was genuine.
What if the supplier is only flagged as risky?
Under Official Letter 6936/CT-QLTT of 18 September 2026, a risk alert is management information only. It is not a basis for concluding that the transaction is fictitious or that the buyer may not credit or reclaim VAT.
Is bank payment enough to prove a transaction is genuine?
No. The tax authority also considers the contract, delivery, transport, warehousing and use of the goods or services.
Can a penalty for using unlawful invoices be challenged?
Yes. If the buyer can show that the fault lies with the seller and has fully recorded the transactions, it has grounds to seek treatment as an incorrect declaration rather than tax evasion.
Legal basis
VAT Law No. 48/2024/QH15, as amended by Law No. 149/2025/QH15 (credit conditions).
CIT Law No. 67/2025/QH15 and Decree No. 320/2025/ND-CP (deductibility conditions).
Decree No. 254/2026/ND-CP on invoices and e-documents.
Decree No. 125/2020/ND-CP, as amended by Decree No. 310/2025/ND-CP.
Official Letter No. 6936/CT-QLTT of the Tax Department dated 18 September 2026; Circular No. 89/2026/TT-BTC.
How W&A can help
Problem supplier invoices are a risk no business can eliminate entirely, but one that can be fully managed. W&A supports businesses with:
Supplier and input invoice reviews: periodic screening to identify risky invoices before the tax authority does.
Supplier control process design: assessment criteria, record-keeping and internal alerts.
Evidence files proving genuine transactions and written explanations to the tax authority.
Amended filings for invoices that cannot be defended, minimising penalties.
Complaints and requests for correct characterisation where a business is penalised for using unlawful invoices.
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