This article will cover the following topics:
- Important points for businesses to know when using invoices.
- Common risks involved in issuing and receiving invoices.
- Measures to prevent losses caused by illegal invoices.
Time of issuing sales invoices
1. When is an invoice required?
Regarding invoicing and taxation, based on Article 4 of Government Decree No. 123/2020/ND-CP dated October 19, 2020, which stipulates the principles for the preparation, management, and use of invoices and documents:
Article 4. Principles for the preparation, management, and use of invoices and documents
1. When selling goods or providing services, the seller must issue an invoice to the buyer (including cases where goods and services are used for promotions, advertising, samples; goods and services used for giving, gifting, exchanging, paying as wages to employees, and internal consumption (except for goods circulated internally to continue the production process); exporting goods in the form of loans, borrowing, or returning goods) and must fully record the content as prescribed in Article 10 of this Decree. In case of using electronic invoices, they must follow the standard data format of the tax authority as prescribed in Article 12 of this Decree…”.
2. When should invoices be issued?
Based on Article 9 of Decree No. 123/2020/ND-CP regarding the time of invoice issuance, the following applies:
Article 9. Time of invoice issuance
1. The time of issuing an invoice for the sale of goods (including the sale of state assets, confiscated assets, assets transferred to the state treasury, and the sale of national reserves) is the time of transferring ownership or the right to use the goods to the buyer, regardless of whether payment has been received or not.
2. The time of invoicing for the provision of services is the time when the service is completed, regardless of whether payment has been received or not. If the service provider receives payment before or during the provision of services, the time of invoicing is the time of payment (excluding cases of receiving deposits or advances to guarantee the performance of contracts for the provision of services such as: accounting, auditing, financial and tax consulting; valuation; surveying, technical design; supervision consulting; and preparation of construction investment projects).
3. In cases of multiple deliveries or handover of individual items or service stages, an invoice must be issued for each delivery or handover, specifying the quantity and value of goods or services delivered.
4. The timing of invoice issuance in certain specific cases is as follows:
… c) For construction and installation activities, the time of invoice issuance is the time of acceptance and handover of the project, project item, or completed construction and installation volume, regardless of whether payment has been received or not.
d) For organizations engaged in real estate business, infrastructure construction, and building houses for sale or transfer:
d.1) In cases where ownership or usage rights have not yet been transferred: If payments are collected according to the project's progress or the payment schedule specified in the contract, the invoice date is the date of payment collection or as agreed upon in the contract.
d.2) In cases where ownership or usage rights have been transferred: The time of invoice issuance shall comply with the provisions of Clause 1 of this Article.”
Common violations of invoicing regulations.
Administrative violations related to invoices are culpable acts committed by organizations or individuals that violate the legal regulations on invoices, which are not criminal offenses and, according to the law, must be subject to administrative penalties.
- Issuing invoices at the wrong time, contrary to regulations.
- Invoices were not issued in ascending order as required.
- No invoices are required for goods and services used for promotions, advertising, or as samples; goods and services given away, gifted, exchanged, or used as payment in lieu of wages for employees, except for goods circulated internally or consumed internally to continue the production process.
- Incorrectly issued invoices that do not comply with regulations have been given to buyers or declared for tax purposes.
- Issuing electronic invoices without prior approval from the tax authority, or before the tax authority approves the use of electronic invoices with or without a tax authority code.
- Issuing invoices for goods and services during the period of temporary business suspension, except for issuing invoices to customers to fulfill contracts signed before the date of notification of temporary business suspension.
- Generate electronic invoices from cash registers without an internet connection, and electronically transfer data to the tax authorities.
- Violations of regulations regarding the transmission of electronic invoices:
- Submitting electronic invoice data to the tax authorities after the prescribed deadline.
- The consolidated electronic invoice data transfer does not include the full number of invoices issued during the period.
- Failure to transfer electronic invoice data to the tax authorities within the prescribed deadline.
Risks businesses should be aware of when using invoices.
Legitimate invoices and documents are those that are correct and complete in form and content as prescribed in Decree No. 123/2020/ND-CP.
1. The following acts of using illegal invoices and documents should be noted:
- Using forged invoices and documents;
- Using invoices or documents that are not valid or have expired;
- Using invoices that have been suspended from use during the period of enforcement by means of suspension of invoice usage, except in cases where their use is permitted according to a notice from the tax authority;
- Using electronic invoices without registering them with the tax authorities;
- Use electronic invoices without a tax authority code in cases where electronic invoices with a tax authority code are required;
- Use invoices for goods and services with an issue date from the date the tax authority determines that the seller is not operating at the business address registered with the competent state authority;
- Using invoices or purchase documents for goods and services with an issue date before the date the issuer is determined to be no longer operating at the registered business address, or before the tax authority has notified the issuer that the issuer is no longer operating at the registered business address, but the tax authority, police, or other relevant agencies have concluded that the invoice or document is illegal.
2. Illegal use of invoices and documents that should be avoided.
- Using invoices and documents that do not contain all the required information; invoices that have been altered or erased improperly;
- Using fictitious invoices and documents (invoices and documents that record expenses and economic transactions but the purchase and sale of goods or services are partially or wholly fictitious); invoices that do not reflect the actual value of the transaction or creating fictitious or fake invoices;
- Using invoices with discrepancies in the value of goods or services, or inaccuracies in mandatory information between different copies of the invoice;
- Using invoices to facilitate the movement of goods during circulation or using invoices for one type of goods or service to substantiate another type of goods or service;
- Using invoices and documents from other organizations or individuals (except for invoices from tax authorities and in cases where invoice issuance is authorized) to legitimize purchased goods and services or sold goods and services;
- Using invoices or documents that the tax authorities, the police, or other competent authorities have concluded are illegally used.
Understanding the responsibilities of both the seller and the buyer when conducting transactions for the purchase and sale of goods and services.
1. Responsibilities of sellers of goods and providers of services using electronic invoices:
When using electronic invoices, the seller has the following responsibilities:
- Manage the usernames and passwords for accounts issued by the tax authorities.
- Creating electronic invoices for the sale of goods and provision of services to submit to the tax authorities for code issuance, and being legally responsible for the legality and accuracy of the electronic invoices.
- Send the electronic invoice with the tax authority code to the buyer immediately after receiving the electronic invoice without the tax authority code (or transfer the data of the issued electronic invoice without the tax authority code to the tax authority via the General Department of Taxation's electronic portal).
- Store and ensure the integrity of all electronic invoices; comply with legal regulations on ensuring the safety and security of electronic data systems.
- Comply with inspections, audits, and verifications by tax authorities and other competent agencies as prescribed by law.
2. Responsibilities of the buyer of goods and services
For buyers, when purchasing goods or services, they have the following responsibilities:
- Request that the seller issue and provide an invoice when purchasing goods or services.
- Provide accurate information necessary for the seller to create an invoice.
- Sign the fully completed invoice copies if the parties have agreed that the buyer will sign the invoice.
- Use invoices for their intended purpose.
- Provide invoice information to competent authorities upon request. If using invoices printed by the tax authority, provide the original invoice. If using electronic invoices, comply with regulations on searching, providing, and using electronic invoice information.
Measures to mitigate risks in invoice management and usage.
When purchasing goods and services directly or online, only receive the goods and declare input VAT as deductible expenses when calculating corporate income tax for electronic invoices issued by sellers (who actually have the goods) with complete information (headquarters, tax code) that matches the information on the order.
Regularly access the Electronic Invoice System on the tax authority's electronic portal (hoadondientu.gdt.gov.vn) and the General Department of Taxation's "Invoice Lookup" mobile app to search and cross-check invoices for goods and services purchased and sold, verifying their validity and promptly detecting illegal invoices.
FAQ - Frequently Asked Questions - Special Cases
For the buyer: Invoices issued at the wrong time will be included in expenses when calculating corporate income tax and declaring input VAT deductions, provided that the transaction was genuine; there are complete invoices and payment documents; and the seller has declared and paid taxes in full.
For the seller: They will be penalized for issuing invoices at the wrong time, with the penalty varying depending on the specific circumstances.
Based on Article 24 of Decree 125/2020/ND-CP, the following is stipulated:
Penalties for violations of regulations on issuing invoices when selling goods and services.
1. A warning penalty will be issued for any of the following acts:
a) Issuing invoices at the wrong time but not resulting in a delay in fulfilling tax obligations and having mitigating circumstances;
...
3. A fine of VND 3.000.000 to VND 5.000.000 shall be imposed for issuing invoices at the wrong time but not resulting in a delay in fulfilling tax obligations, except in the case stipulated in point a, clause 1 of this Article.
4. A fine of between VND 4.000.000 and VND 8.000.000 for one of the following acts:
a) Issuing invoices at times other than those prescribed by law regarding invoices for the sale of goods and provision of services, except for cases specified in point a, clause 1, and clause 3 of this Article;
...
So:
– If an invoice is issued at the wrong time but does not result in a delay in fulfilling tax obligations and there are mitigating circumstances, a warning penalty will be imposed.
– If an invoice is issued at the wrong time but does not result in a delay in fulfilling tax obligations, the penalty will be from 3 million to 5 million VND.
– If invoices are issued at the wrong time (except for the two cases above), the penalty ranges from 4 million to 8 million VND.
Question:
Company A operates from Monday to Saturday morning and hires company B to handle customs declaration services, working overtime to clear export goods. However, the customs clearance was granted on Saturday afternoon (a time when company A is not operating), so no electronic invoice was issued on the day of clearance.
Reply:
The Ministry of Finance responded to this issue as follows:
Based on Government Decree No. 123/2020/ND-CP dated October 19, 2020, regulating invoices and supporting documents:
Article 4 stipulates the principles for the creation, management, and use of invoices and documents:
“1. When selling goods or providing services, the seller must issue an invoice to the buyer (including cases where goods and services are used for promotions, advertising, samples; goods and services used for giving, gifting, exchanging, paying as wages to employees, and internal consumption (except for goods circulated internally to continue the production process); exporting goods in the form of loans, borrowing, or returning goods) and must fully record the content as prescribed in Article 10 of this Decree. In the case of using electronic invoices, they must follow the standard data format of the tax authority as prescribed in Article 12 of this Decree…”.
Article 13 stipulates the application of electronic invoices when selling goods or providing services:
“… 3. Regulations on the application of electronic invoices, internal warehouse release and transportation slips, and consignment goods release slips for specific cases as required by management are as follows:
… c) Businesses that declare and pay VAT using the deduction method and export goods and services (including businesses that process goods for export) must use electronic VAT invoices when exporting goods and services.
When goods are shipped to the border or to the place where export procedures are carried out, the business uses an internal warehouse release and transportation slip as prescribed to document the circulation of goods in the market. After completing the procedures for exporting goods, the business issues a VAT invoice for the exported goods…”.
Based on Government Decree No. 125/2020/ND-CP dated October 19, 2020, regulating administrative penalties for violations related to taxes and invoices:
Article 24 stipulates penalties for violations of regulations on issuing invoices when selling goods and services:
“1. A warning penalty shall be imposed for any of the following acts:
a) Issuing invoices at the wrong time but not resulting in a delay in fulfilling tax obligations and having mitigating circumstances;
… 3. A fine of VND 3.000.000 to VND 5.000.000 shall be imposed for issuing invoices at the wrong time but not resulting in a delay in fulfilling tax obligations, except in cases specified in Point a, Clause 1 of this Article.
… 4. A fine of VND 4.000.000 to VND 8.000.000 shall be imposed for any of the following acts:
a) Issuing invoices at times other than those prescribed by law on invoices for the sale of goods and provision of services, except for cases specified in Point a, Clause 1, and Clause 3 of this Article;…”.
Based on the above regulations, if your company has goods and services for export (including facilities for processing goods for export), when exporting goods and services, it must issue electronic VAT invoices in accordance with Point c, Clause 3, Article 13 of Government Decree No. 123/2020/NĐ-CP dated October 19, 2020.
If your company violates regulations regarding the issuance of invoices at the wrong time when selling goods or services, it will be subject to penalties as stipulated in Article 24 of Government Decree No. 125/2020/ND-CP dated October 19, 2020.
We suggest that you base your actions on the actual situation and refer to relevant legal documents to ensure compliance with regulations. If any difficulties arise during implementation, please provide relevant documentation and contact the directly supervising tax authority for specific guidance.
Link to the original response from the Government Newspaper.