Supplier Ceases Operations, Abandons Its Business Address or Goes Bankrupt: Are Previously Paid Expenses Disallowed for CIT?

It is one of the most unsettling risks at tax finalization: a company buys goods legitimately, pays in full, and books the expense normally — then a year or two later, the supplier abandons its registered business address or is reported as having ceased operations. When the tax authority later conducts an audit, that expense gets questioned, even though everything was in order at the time of the transaction.

Responding to Official Letter No. 111/HHDNĐTNN-HTDN from the Vietnam Association of Foreign Invested Enterprises (VAFIE), on 28 August 2026 the Tax Department issued Official Letter No. 6482/CT-QLNT setting out its position on this issue.

The full text of Official Letter No. 6482/CT-QLNT dated 28 August 2026 can be downloaded here.

Quick summary

1. The letter’s exact wording

Official Letter No. 6482/CT-QLNT states:

Under corporate income tax law, whether an expense is deductible or non-deductible when determining taxable income is governed by Article 6 of Circular No. 78/2014/TT-BTC dated 18 June 2014 of the Ministry of Finance (as amended and supplemented by Circular No. 96/2015/TT-BTC), and by Articles 9 and 10 of Decree No. 320/2025/NĐ-CP dated 15 December 2025 of the Government.

Where a company incurs a payment to a supplier before that supplier ceases operations, abandons its business address, goes bankrupt, or commits other legal violations, the tax authority shall base its assessment on the law in effect during the relevant period, together with actual records, invoices, vouchers and related documents, to determine whether the expense satisfies the conditions for deduction when determining corporate income tax taxable income.

Determining whether an expense is deductible for corporate income tax purposes is not based solely on the supplier’s status, but is also assessed on the basis of tax law, actual records, invoices, vouchers and related documents of each specific case.

2. Three principles to draw from this

First — the supplier’s status is not an independent ground for disallowing an expense. The letter uses the phrase “not based solely on the supplier’s status.” The fact that a supplier later ceases operations or abandons its business address is a fact to be considered, not an automatic conclusion.

Second — assessment is case by case. The letter stresses “of each specific case.” There is no blanket rule covering every payment made to a supplier that has since disappeared; each expense is examined on its own record.

Third — the law of the period in which the expense arose applies. The phrase “law in effect during the relevant period” matters for companies under audit for prior years: an expense is assessed under the regulations in force when it arose, not the regulations in force at the time of the audit. The letter cites two benchmarks — Article 6 of Circular No. 78/2014/TT-BTC (as amended by Circular No. 96/2015/TT-BTC) for the earlier period, and Articles 9 and 10 of Decree No. 320/2025/NĐ-CP for the current period.

3. Deduction conditions under Decree No. 320/2025/NĐ-CP

Clause 1, Article 9 of Decree No. 320/2025/NĐ-CP provides that, except for the non-deductible expenses listed in Article 10, a company may deduct an expense when determining taxable income if it satisfies all three conditions:

• Point a — the expense actually arose and is related to the company’s production and business activities;
• Point b — the expense is supported by adequate invoices and vouchers as required by law;
• Point c — the expense has a non-cash payment voucher for purchases of goods, services and other payments where each individual payment is VND 5 million or more.

Point c1 adds: purchases from the same seller made multiple times on the same day, each below VND 5 million but totaling VND 5 million or more, also require a non-cash payment voucher.

Point c3 addresses purchases on credit: an individual purchase of VND 5 million or more that remains unpaid at the time the expense is recorded is still included in deductible expenses. However, if the company later pays without a non-cash payment voucher, it must declare and reduce the expense in the tax period in which the cash payment occurs — even if the tax authority has already issued an inspection or audit decision for the tax period in which the expense originally arose.

Conversely, Clause 1, Article 10 of Decree No. 320/2025/NĐ-CP identifies the first category of non-deductible expense as: expenses that fail to satisfy all the conditions set out in Clause 1, Article 9.

Reading these two articles together reveals the legal basis for the letter’s conclusion: neither Article 9 nor Article 10 of Decree No. 320/2025/NĐ-CP contains any provision that uses a supplier’s operating status as grounds for disallowing an expense. The filter is the three conditions in Clause 1, Article 9, and all three attach to the transaction itself — its authenticity, its invoices and vouchers, and its method of payment.

4. Documentation to prepare

The letter refers to “actual records, invoices, vouchers and related documents” without listing them specifically. Based on the three conditions in Clause 1, Article 9, an explanation file should be organized around each condition:

To support condition a — the expense actually arose and served production or business activities: the contract or purchase order, a goods handover record, a warehouse receipt, a service acceptance record, shipping documents, and ordinary traces of a commercial transaction such as email correspondence and quotations. This is the most important group of evidence once the supplier is no longer around to confirm anything, because it proves the transaction was real rather than resting on an invoice alone.

To support condition b — valid invoices and vouchers: the supplier’s invoice and evidence of the invoice’s validity status at the time it was issued.

To support condition c — non-cash payment: payment orders and bank statements for each individual payment of VND 5 million or more.

A timing point worth noting: these documents should be gathered and kept at the time of the transaction itself, not held back until the supplier runs into trouble. Once a supplier has abandoned its business address, supplementing the file with missing documents is close to impossible.

5. Worked examples

Example 1 — Fully documented transaction, supplier disappears afterward

Company A purchases raw materials worth VND 300 million from Supplier B in March 2026. There is a contract, an invoice, a handover record, a warehouse receipt, and payment by bank transfer. In November 2026, the tax authority reports that Supplier B has abandoned its business address.

→ The expense satisfies all three conditions in Clause 1, Article 9 of Decree No. 320/2025/NĐ-CP at the time it arose. In line with Official Letter No. 6482/CT-QLNT, the supplier’s later status does not automatically disqualify the expense; the tax authority reviews the actual transaction record.

Example 2 — Cash payment

Company C purchases a service worth VND 80 million, with an invoice and an acceptance record, but pays in cash. The supplier later ceases operations.

→ The expense is not deductible, but the reason is failure to satisfy point c of Clause 1, Article 9 (each individual payment of VND 5 million or more must have a non-cash payment voucher), not the supplier’s cessation of operations.

This distinction matters when explaining a case to the tax authority: the company needs to know exactly which condition disqualified the expense, so as not to argue the wrong point.

Example 3 — Purchase on credit, later paid in cash

Company D records an expense of VND 120 million in the 2026 tax period for goods purchased on credit from Supplier E. In 2027, Company D pays in cash.

→ Under point c3 of Clause 1, Article 9, the expense remains deductible at the time it was recorded in the 2026 period. However, because the payment lacked a non-cash payment voucher, Company D must declare and reduce the expense in the 2027 tax period — the period in which the cash payment occurred — even if the tax authority has already issued an inspection decision for the 2026 period.

6. Practical recommendations

• Keep transaction records as complete sets, not scattered pieces. For each significant supplier, assemble the contract, invoice, handover documents and payment vouchers into one complete file as soon as the transaction is finished.
• Pay by non-cash methods for every amount of VND 5 million or more, even if the supplier asks for cash. This is the condition most easily lost and impossible to fix later.
• Track unpaid credit purchases. Point c3 of Clause 1, Article 9 creates an obligation to reduce the expense in the period of payment — a receivables/payables review process is needed to avoid missing this.
• When a supplier turns out to have a problem, review the related transactions immediately and assemble the explanation file, rather than waiting for an inspection decision.
• When explaining a case, anchor the argument to the three conditions in Clause 1, Article 9 and ask the tax authority to specify which condition is in question. Official Letter No. 6482/CT-QLNT provides grounds to object to an expense being disallowed based solely on the supplier’s status.

Official Letter No. 6482/CT-QLNT also addresses a first matter on VAT and corporate income tax policy for labor sub-leasing activities. On that matter, the Tax Department did not respond directly but instead referred to Official Letter No. 3705/CT-CS dated 5 June 2026 (addressed to the Phu Tho Tax Department) and Official Letter No. 5200/CT-CS dated 24 July 2026 (addressed to the Korean Chamber of Business in Vietnam).

Disclaimer

This article is based on:

• Official Letter No. 6482/CT-QLNT dated 28 August 2026 of the Tax Department, responding to the Vietnam Association of Foreign Invested Enterprises on tax issues concerning labor sub-leasing and expenses for companies that have ceased operations;
• Articles 9 and 10 of Decree No. 320/2025/NĐ-CP dated 15 December 2025 of the Government, detailing certain articles and measures for implementing the Law on Corporate Income Tax.

Three notes on scope:

1. Article 6 of Circular No. 78/2014/TT-BTC (as amended by Circular No. 96/2015/TT-BTC) is cited by the letter for earlier tax periods but is not within the scope of comparison of this article. Companies dealing with prior-period matters should consult this circular directly.
2. The documentation checklist in Section 4 is a practical suggestion developed by TrustlineAX based on the three conditions in Clause 1, Article 9 of Decree No. 320/2025/NĐ-CP, not a checklist prescribed by the official letter or by law.
3. Non-cash payment vouchers are referenced in point c of Clause 1, Article 9 by cross-reference to value-added tax legislation; the details are outside the scope of this article.

Official Letter No. 6482/CT-QLNT is a response from the Tax Department to a business association, not a legal normative document. It sets out a principle for assessment, not a conclusion on any specific transaction.

This article is for reference only, does not replace the original legal text, and does not constitute advisory opinion for any specific case. Companies should consult the regulations in effect at the time of application and seek advice from a qualified professional before making decisions.

TrustlineAX — Tax and accounting advisory for businesses in Vietnam.