Main point:
- The time of issuing an invoice for the sale of goods must be the time of transferring ownership or the right to use the goods to the buyer, regardless of whether payment has been received or not.
- The date of issuing an invoice for the provision of services must be the date the service is completed, regardless of whether payment has been received or not. If the service provider collects payment before or during the provision of services, the date of issuing the invoice must be the date of payment.
Many businesses purchase goods/services to resell/provide services to their customers, but they issue invoices to their customers before receiving invoices from the input suppliers. This is a very common problem that many business owners and accountants often overlook. What are the potential negative impacts this could have on the business?
1. Time of invoice issuance
Based on the following current legal regulations:
– Circular No. 39/2014/TT-BTC, providing guidance on the implementation of Government Decree No. 51/2010/ND-CP dated May 14, 2010 and Government Decree No. 04/2014/ND-CP dated January 17, 2014, regulating invoices for the sale of goods and provision of services;
– Circular No. 10/2014/TT-BTC, providing guidance on administrative penalties for violations related to invoices;
Accordingly, Point a, Clause 2, Article 16 of Circular No. 39/2014/TT-BTC, issued by the Ministry of Finance, stipulates the time of invoice issuance for the sale of goods and provision of services as follows:
- The time of issuing an invoice for the sale of goods must be the time of transferring ownership or the right to use the goods to the buyer, regardless of whether payment has been received or not.
- The date of issuing an invoice for the provision of services must be the date the service is completed, regardless of whether payment has been received or not. If the service provider collects payment before or during the provision of services, the date of issuing the invoice must be the date of payment.
- In cases of multiple deliveries, an invoice must be issued for the quantity and value of goods corresponding to each delivery.
Accordingly, generally, invoices must be issued at the time of transfer of ownership or the right to use goods or completion of services to the buyer, except in certain specific cases stipulated by law.
2. Impact of not issuing invoices on time
Based on the above regulations of the Ministry of Finance, a business that has not received an invoice from the seller after receiving goods or services from a partner, or after the partner has transferred ownership, use, or completed the provision of services to the business without issuing an invoice, is in violation of the regulations regarding the timing of invoice issuance. In this case, the partner will be penalized by the tax authorities for this violation, as well as other corresponding administrative measures.
However, businesses will also be held jointly liable for issuing invoices at the wrong time. Specifically, businesses cannot explain to the tax authorities why output invoices are issued before the date of input invoices for goods and services provided. It's unacceptable to sell goods without receiving them into inventory; therefore, the tax authorities consider these input invoices inconsistent with output revenue, leading to increased value-added tax payable, late payment penalties, administrative penalties, and even the exclusion of the cost of goods sold, resulting in increased corporate income tax payable.
3. Regulations on penalties for issuing invoices at the wrong time.
Article 4 of Circular No. 68/2019/TT-BTC, issued on September 30, 2019, by the Ministry of Finance, provides detailed regulations on the timing of the creation and issuance of legally valid invoices for businesses.
Any unit that fails to comply with the regulations regarding the timing of creation and issuance will be considered to have committed a violation and will be held fully responsible under the law.
Based on Decree No. 125/2020/ND-CP, newly issued on October 20, 2020 and effective from December 5, 2020, the Government has clearly stipulated the method of penalties for invoices issued at the wrong time.
Specifically, Article 24 of Decree No. 125/2020/ND-CP stipulates the penalties for cases of issuing invoices at the wrong time as follows:
- A warning penalty will be issued for cases where invoices are issued at the wrong time but do not lead to a delay in fulfilling tax obligations and there are mitigating circumstances;
- A fine of 3-5 million VND will be imposed for issuing invoices at the wrong time but not resulting in a delay in fulfilling tax obligations (except for cases stipulated in Point a, Clause 1, Article 24, Decree No. 125/2020/ND-CP);
- A fine of 4 to 8 million VND will be imposed for issuing sales invoices or service provision invoices at a time different from that stipulated by law.
4. Conclusion
Recognizing the importance of timely invoicing compliance, businesses need to understand that any transaction from a partner can impact their operations. Any non-compliance should not be underestimated without first assessing the risks involved. For example, with invoicing, ensuring proper monitoring by both the supplier and the user of the product/service will help reduce unnecessary tax risks for both parties.