In case of having to issue VAT invoices for damaged goods
Clause 1, Article 4 of Decree 123/2020/ND-CP (amended and supplemented by Decree 70/2025/ND-CP) stipulates:
When selling goods or providing services, sellers must prepare invoices to deliver to buyers (including goods and services used for promotion, advertising, samples; giving, gifts, exchanging, paying wages to employees; internal consumption, except for domestically traded goods to continue the production process; exporting goods in the form of lending, lending, or returning goods) and cases of invoices according to Article 19 of this Decree.
Thus, only when a transaction of selling goods or providing services arises must an invoice be issued. In case the goods are damaged, lose value and are no longer able to be consumed, it is not mandatory to issue invoices. However, if there are activities to process, liquidate or other transactions related to those goods, they must still comply with invoice regulations.
VAT deduction for damaged goods
According to Clause 1, Article 23 of Decree 181/2025/ND-CP:
Value Added Tax (VAT) of goods and services used for the production and trading of goods and services subject to VAT is fully deducted, including cases of input VAT of goods and services that are damaged and not compensated; goods that are naturally depleted during transportation.
Business establishments must have complete records and documents proving that the loss is not compensated to be deducted from tax. In case the law stipulates the natural loss level, only the input VAT corresponding to the loss level in the norm will be deducted, the part exceeding the norm will not be deducted.
Thus, if the goods are damaged, expired, do not receive compensation and have complete supporting documents, they will still be deducted from input VAT.
Conditions for deducting input VAT
Clause 2, Article 14 of the Law on Value Added Tax 2024 stipulates:
Having a VAT invoice when purchasing goods, services or a VAT payment certificate at the import stage, or a VAT payment certificate on behalf of a foreign party as prescribed;
Having non-cash payment documents for purchased goods and services (except for special cases specified by the Government);
For exported goods and services, in addition to the above conditions, it is also necessary to: sign a contract with an overseas party, sales invoice, non-cash payment document, customs declaration and other related documents such as packaging form, shipping document, goods insurance (if any).
