Input VAT deduction is an issue that many businesses are concerned about when buying gifts for employees. Determining valid expenses not only affects tax obligations but also directly impacts business profits and reputation. This article will explain in detail how to apply input VAT deduction for employee gifts, based on legal basis, practical examples and professional solutions from MAN – Master Accountant Network.
See more articles at: VAT Overview
Explain the number of related concepts
To understand whether buying gifts for employees is deductible for input VAT or not, it is necessary to first grasp some basic concepts in VAT regulations. These concepts help businesses correctly determine the nature of the tax payable, the conditions for deduction and legal rights during the tax declaration process.
What is input VAT?
Input value-added tax (VAT) is the VAT shown on the input invoice when a business purchases goods and services. This is the tax that the business has paid to the supplier and can be recorded for deduction if it meets the conditions.
See more articles at: What is output and input VAT? New updates in 2025
What is VAT deduction?
VAT deduction is an accounting-tax mechanism that allows businesses to deduct input VAT (tax paid when purchasing goods and services) from output VAT (tax collected when selling goods and services), helping businesses reduce the amount of tax payable, avoid double taxation and accurately reflect actual added value.
See more articles at: What is VAT deduction? Some latest related regulations 2025
What is input VAT deduction?
Input VAT deduction is the process by which a business declares and uses legal input VAT (with valid invoices and documents) when purchasing goods and services, in order to deduct the VAT payable in the tax period, or transfer to the next period if the input amount is greater than the output.
Legal basis
To determine the deduction of input VAT for employee gifts, businesses need to base on current legal documents and regulations that will soon take effect. Including:
Law on VAT No. 13/2008/QH12 and amended and supplemented laws
This is the fundamental legal document regulating value added tax in Vietnam. The law clearly defines the taxable subjects, deductible amounts, principles and conditions for VAT deduction. According to this law, legal input costs that directly serve production and business activities and have valid invoices will be entitled to VAT deduction.
This document is currently valid until June 30, 2025, and serves as the legal basis for all transactions that occurred before the new Law comes into effect. For example, if a business buys gifts for employees in 2024 and has a valid invoice, the deduction principles from this law can still be applied.
Decree 209/2013/ND-CP and the decrees amending and supplementing
This Decree provides detailed guidance on how to implement the Law on Value Added Tax. In particular, the Decree explains the principles of deduction, conditions for deduction, as well as how to classify goods and services used for the purpose of giving or giving gifts to employees. This helps businesses easily identify valid expenses for deduction, avoiding false declarations and rejection by tax authorities.
The Decree also stipulates measures for checking and storing invoices and documents, aiming to make the tax declaration process transparent. Thanks to that, businesses can manage documents scientifically, reduce legal risks and ensure full compliance with VAT regulations.
VAT Law No. 48/2024/QH15 (effective from 01/07/2025)
This new law replaces all previous regulations, while maintaining the principle of VAT deduction but adding more details. Some highlights include:
- More clearly define invoices, documents and payment methods, helping businesses easily demonstrate valid expenses.
- Adds some deductible exceptions without traditional invoices, facilitating small transactions, gifts, or difficult to invoice situations.
- Tighten the obligation to make additional declarations when there are errors, requiring businesses to review and make timely adjustments to avoid tax arrears and penalties.
Introduction to input VAT deduction for employee gifts
In the current economic context, many businesses spend their budget on buying gifts for employees on holidays, birthdays, company anniversaries, to honor outstanding employees or to give year-end bonuses. This is an important activity to retain employees and promote working spirit, but at the same time, it also creates a legal and tax issue that needs to be noted: is this expense deductible for input VAT? This is a question that many businesses have difficulty with when preparing tax reports and managing documents.
According to Article 4, Law on Value Added Tax No. 13/2008/QH12 and VAT Law 2024, all legal input costs, directly serving production and business activities and having valid invoices, are entitled to deduct input VAT. However, employee gifts are often in the form of welfare costs or personnel support costs, not directly involved in the production or service provision process. Therefore, many businesses are confused when declaring, not knowing whether to account for deductible costs or non-deductible costs.
Errors in declaring employee gift expenses can have serious consequences. Businesses can easily be denied input VAT deductions, have to pay additional taxes, and even be subject to additional collection and administrative fines. At the same time, the company's reputation is damaged and internal financial management is difficult, affecting reporting and budget planning.
Therefore, understanding the relevant legal regulations and properly applying input VAT deduction for employee gifts not only helps businesses comply with the law, but also protects financial interests, reduces legal risks and ensures transparency in cost management. Businesses need to clearly identify the type of gift, the maximum applicable value, and fully store invoices and documents so that the input VAT deduction process takes place smoothly and accurately.
Thus, correctly applying input VAT deduction is not only a compliance issue but also an effective management solution, helping businesses optimize costs, ensure employee benefits and enhance business reputation in the market.
| CONTENT | SUMMARY |
| Background | Businesses often buy gifts for employees on holidays, birthdays, anniversaries, and year-end bonuses to retain staff and motivate them to work. |
| Legal issues | Question arises: Are employee gifts deductible for input VAT? |
| Legal basis | According to Article 4 of the 2008 Law on VAT, legal input costs that directly serve production and business and have valid invoices are deductible. However, employee gifts are usually welfare costs that do not directly participate in production and business. |
| Business difficulties | It is unclear whether to declare deductible or non-deductible expenses, which can easily lead to confusion when preparing tax reports. |
| Risks of false declaration |
|
| Solution | Understand legal regulations, identify the correct type of gift and value, and keep all invoices and documents. |
| Conclude | Correctly applying input VAT deductions ensures compliance with the law, optimizes costs, protects employee rights and enhances business reputation. |
Limitations of outsourcing services on input VAT deduction
Before looking for the optimal solution, businesses need to clearly identify the current limitations of external accounting services and invoice management software. Below is a summary of common problems when applying external services, from the lack of detailed instructions, no legal citations to limitations in case studies and control tools. Understanding these weaknesses helps businesses choose the right solution to ensure accurate and effective input VAT deduction.
| STT | LIMIT | DETAILED DESCRIPTION | IMPACT ON INPUT VAT DEDUCTION |
|
1 |
Lack of detailed guidance on employee gifts | External accounting services do not clearly classify gifts in kind, vouchers, and gift cards. | Businesses find it difficult to determine valid costs for input VAT deduction. |
| 2 | Lack of specific legal citation | No relevant Circulars, Decrees, or Laws are mentioned. | Difficulty in proving valid expenses to tax authorities, increasing the risk of refusal to deduct input VAT |
| 3 | No real case studies provided | Few examples to illustrate business situations | Enterprises find it difficult to accurately apply regulations on input VAT deduction. |
| 4 | Limit search and control tools | The software automatically checks only valid invoices. | Not classifying expenses properly, easily declaring incorrect input VAT deductions |
| 5 | No instructions for controlling multiple branches | Outsourcing services are not yet optimal in managing gift costs for branches. | Increased risk of missing valid invoices, affecting input VAT deduction |
| 6 | Lack of legal risk warning | Do not remind businesses about situations of collection or fines | Businesses are prone to making mistakes when declaring input VAT deductions. |
| 7 | No new policy updates | Old software and services do not apply the latest regulations | Gift expenses may be denied input VAT deduction if not complied with. |
| 8 | Lack of storage instructions and cost justification | No instructions for saving invoices and accompanying documents | Difficult to prove to tax authorities, reducing the ability to deduct input VAT |
MAN – Master Accountant Network: Professional solutions to help businesses optimize input VAT deduction
In the practice of financial and accounting management, giving gifts to employees on special occasions is a regular activity of enterprises. However, this expense is not always deductible from input VAT legally if there is a lack of supporting documents or if the cost is incorrectly classified. This is the point that causes many enterprises to encounter difficulties, easily leading to tax risks, being collected or being administratively sanctioned.
As a professional financial consultant and companion, MAN – Master Accountant Network provides comprehensive solutions to help businesses manage and deduct input VAT in the most legal, transparent and optimal way. Specifically:
- Check and verify invoices and documents: Ensure all gift purchase expenses have valid invoices and meet the standards of the VAT Law.
- Expense classification instructions: Clearly distinguish between welfare costs, management costs and production and business costs to accurately determine which items are eligible for deduction, based on the Law on Value Added Tax and Circular 78/2021/TT-BTC.
- Declaration and prepare accurate tax reports: Directly support the accounting department in the declaration process, ensuring data is consistent, accurate and in compliance with current legal regulations.
- Scientific document management and storage: Build a transparent document management system - books, easy to look up when tax authorities conduct inspections.
- Support look up electronic VAT invoice: Apply technology to control invoice validity, minimize the risk of errors or invoices not eligible for deduction.
Through these services, MAN not only helps businesses minimize legal risks, but also optimizes tax costs, improves financial management efficiency, and creates peace of mind for businesses in fully complying with tax regulations.
Benefits of services at MAN – Master Accountant Network for businesses
Buying gifts for employees is an activity closely associated with corporate culture, but if not handled properly in terms of tax, this expense can become a potential risk. With the companionship of MAN - Master Accountant Network, businesses are guaranteed that the entire process of deducting input VAT is transparent, accurate and legally safe.
The difference that MAN brings lies in not only providing technical solutions (invoice checking, cost classification, declaration), but also helping businesses build long-term management mechanisms. The tools, instructions and processes deployed by MAN have proven their practical effectiveness through many customers: from minimizing errors in declaration, saving accounting resources, to creating a standard tax management platform, ready for any audit.
| STT | Benefit | Practical significance |
| 1 | Legal input VAT deduction | Ensure gift expenses are recorded properly to avoid the risk of being rejected by tax authorities. |
| 2 | Save resources and time | Reduce workload for accounting department thanks to scientific document lookup and verification system. |
| 3 | Optimize operating costs | Increase financial efficiency by taking full advantage of tax benefits allowed by law. |
| 4 | Increase credibility & transparency | Businesses demonstrate professionalism, comply with tax standards, and create trust with investors and partners. |
| 5 | Support the entire enterprise system | Centralized tax data management, synchronized between multiple branches, easy to control from headquarters. |
Instead of having accountants “race” to process documents during the settlement season, businesses can proactively manage taxes from the beginning with the support of MAN. This is not only a short-term solution, but also a strategic step to help businesses develop sustainably and firmly against all future tax risks.
Real case of Enterprise X before and after applying services at MAN – Master Accountant Network
To clearly illustrate the effectiveness of the service, we would like to share a real case study. For reasons of information security and privacy policy, the customer's name is anonymized under the symbol “Business X”This is a company operating in the F&B (food and beverage) sector, with a large workforce, a wide network of branches and a very high daily transaction volume.
Before working with MAN, this company had many difficulties in managing invoices and accounting for employee gift expenses. After applying MAN – Master Accountant Network’s services, the situation has changed significantly with clear improvements in terms of costs, time and tax compliance.
About Business X
Company X is a company operating in the F&B (food and beverage) industry, with a network of branches spread across many districts in the city. The large number of employees and high number of daily transactions have caused the volume of invoices and documents generated every month to reach thousands of sheets.
In its regular operations, Company X maintains a gift policy for employees to encourage their work spirit, including: vouchers, gift cards, and even physical items. However, without professional support from MAN – Master Accountant Network, Company X has encountered many difficulties in controlling and accurately accounting for these expenses.
Challenges before adopting the service
Before cooperating with MAN, Company X faced a series of problems:
| Index | Value | Real impact |
| Employee gift declaration error rate | 35% | Many expenses are excluded, resulting in loss of tax benefits. |
| Gift expenses are denied deduction | 250 million/year | Directly increases financial costs for businesses. |
| Time for accountant to check invoice | 120 hours/month | Accounting staff is overloaded, reducing efficiency for other jobs. |
These figures reflect the fact that self-managing invoices and tax declarations without a system and accompanying experts has exposed businesses to great tax risks, lost legal costs, and wasted significant accounting resources.
The solution that MAN – Master Accountant Network deploysi
After receiving the situation, MAN – Master Accountant Network designed a comprehensive, specialized solution for the F&B industry, including:
- Review and advise on invoices and documents: Ensure all arising documents are eligible for input VAT deduction.
- Classify gift expenses according to Tax Law: Clearly separate valid expenses to avoid being rejected during audit.
- Apply automatic inspection system: Replace manual control, help detect errors quickly and accurately.
- Training internal accounting team: Equip knowledge on standard deduction and declaration procedures, minimizing dependence on individuals.
Conclude
Optimizing input VAT deductions for employee gift expenses is more than just a savings figure. When these expenses are properly and transparently accounted for, businesses not only reduce their tax burden but also create a solid financial management foundation. Cash flow is used efficiently, budgets are optimized and the ability to reinvest in business activities becomes more proactive.
Along with financial benefits, the accuracy of the declaration process also helps businesses avoid legal risks when tax authorities conduct inspections. In fact, many companies suffer great losses due to expenses that do not meet regulations and are excluded from valid expenses. Thanks to the support from MAN – Master Accountant NetworkThese risks are tightly controlled through invoice auditing, legal cost classification and the application of modern declaration support systems.
Accounting services and professional auditing services MAN's tax services help businesses standardize tax procedures, enhance reputation and trust with partners, tax authorities as well as internal staff. Contact MAN now for advice and support on effective and comprehensive tax management.
Contact information:
MAN – Master Accountant Network
- Address: No. 19A, Street 43, Tan Thuan Ward, Ho Chi Minh City
- Hotline: 0903 963 163 – 0903 428 622
- E-mail: man@man.net.vn
