Invoices can be considered a crucial document among the input documents that organizations, households, and individual businesses need to pay close attention to in order to check and manage them strictly. In recent years, the State has increasingly tightened the management and use of invoices when selling goods and providing services. Specifically, this includes the mandatory use of electronic invoices instead of paper invoices, and invoices generated from point-of-sale systems connected to the Tax authorities.
This article provides guidance on legal regulations and ways to prevent risks arising from the use of invoices for businesses.
Therefore, to ensure compliance with legal regulations and avoid risks arising from the use of invoices, let's explore the guidelines below with Expertis.
1. The role of invoices for businesses
1.1. What is an invoice?
An invoice is a type of document created by the seller to record the details of a transaction, a sale of goods, or provision of services as stipulated by law, and must ensure the following:
- Legality
- Rationality
- Validity
View more: LEGAL, VALID, AND REASONABLE INVOICES AND DOCUMENTS
1.2. A proper understanding of the importance of invoices.
Because invoices are documents that reflect a company's production and business activities, the importance of paying attention to invoices is something every business needs to recognize. Specifically:
- For accounting purposes: invoices serve as the basis for accountants to prepare reports on business operations, declare various taxes, and accurately settle accounts at the end of the year for submission to the director or tax authorities.
- For the buyer: an invoice is proof that the buyer has paid and fully covered the costs to receive the product or service. Without an invoice, the buyer will have no right to sue in the event of a dispute or conflict.
- For the supplier: the invoice will show information related to both the buyer and seller, the date of product/service delivery, in order to record the business history of the unit. The seller needs to keep the invoice to use as evidence with the buyer in case of conflicts or disputes.
In short, businesses, business establishment It is important to note and Understanding the importance of invoices is crucial for planning their management effectively. Furthermore, good invoice management demonstrates a rigorous process, controls business costs, prevents losses, and minimizes instances of malicious actors exploiting loopholes in management to commit budget fraud, disclose technological secrets, or business strategies.
2. What should businesses keep in mind when using invoices?
2.1. Principles of invoice usage
According to the provisions of Articles 4 and 8 of Decree No. 123/2020/ND-CP, enterprises, business establishment The following guidelines should be noted when using invoices:
- When selling goods or providing services, the seller must prepare and issue an invoice to the buyer.
- Invoices must contain all the required information. In the case of using electronic invoices, the invoices must be prepared in the standard data format of the tax authority.
- Businesses that declare and pay value-added tax (VAT) using the deduction method and export goods and services must use electronic VAT invoices when exporting goods and services.
2.2. Time of invoice issuance
Based on Article 9 of Decree No. 123/2020/ND-CP, which stipulates the timing of invoice issuance for each subject, the specific cases are determined as follows:
- Regarding the sale of goodsThe time of issuing the invoice 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.
- Regarding service provisionThe invoice must be issued on 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 the service, the invoice must be issued on the date of payment.
- For construction activitiesFor installation, the invoice date is the date of acceptance and handover of the project, project item, construction volume, or completion of installation, regardless of whether payment has been received or not. In the case of multiple deliveries, an invoice must be issued for the quantity and value of goods corresponding to each delivery.
- For real estate businessesInfrastructure development, building houses for sale, and property transfers are divided into the following cases:
- Ownership and usage rights have not yet been transferred: if payments are collected according to the project 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.
- Once ownership or usage rights have been transferred, the invoice date is the date of the transfer, regardless of whether payment has been received or not.
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, such as:
- Providing services in large quantities and on a regular basis requires time for data reconciliation between the service provider and the customer/partner, such as providing direct support services for air transport, supplying aviation fuel to airlines, providing electricity, water, television services, postal and delivery services, telecommunications services, logistics services, and information technology services provided on a fixed schedule. The time of invoice issuance is the time when the data reconciliation and verification between the parties is completed, but no later than the 07th day of the month following the month in which the service was provided, or no later than 07 days from the end of the agreed period.
- Businesses that purchase air transport services through websites and e-commerce systems. In accordance with international practice, invoices must be issued no later than 05 days following the date the air transport service document is issued on the website and e-commerce system.
3. Regulations on administrative penalties for invoice violations
Circular No. 68/2019/TT-BTC, issued on September 30, 2019, by the Ministry of Finance, details regulations on the timing of issuing and granting legal invoices to businesses. Any entity failing to comply with these regulations will be considered to have committed a violation and will be held fully responsible under the law.
3.1. Regarding the act of issuing invoices at the wrong time.
According to Article 24 of Decree No. 125/2020/ND-CP, which stipulates penalties for issuing invoices at the wrong time, the following applies:
- If it does not lead to delays in fulfilling tax obligations:
- A warning will be issued if there are mitigating circumstances.
A fine of 3.000.000 to 5.000.000 VND will be imposed, except in cases of a warning penalty. - If tax obligations are delayed, a fine ranging from 4.000.000 VND to 8.000.000 VND will be applied.
- A warning will be issued if there are mitigating circumstances.
3.2. Regarding the act of not issuing invoices when selling goods.
According to Articles 17 and 24 of Decree No. 125/2020/ND-CP, the following specific penalties apply to the act of failing to issue invoices when selling goods or providing services to buyers as required:
- A fine of between 10.000.000 VND and 20.000.000 VND will be imposed.
- If the tax authorities conclude that the act constitutes tax evasion, then:
- A one-time fine equal to the amount of tax evaded will be imposed on taxpayers who violate the law and have one or more mitigating circumstances.
- A fine of 1,5 times the amount of tax evaded will be imposed on taxpayers who violate the law without any aggravating or mitigating circumstances;
- A fine of double the amount of tax evaded will be imposed on taxpayers who violate regulations and have an aggravating circumstance.
A fine of 2,5 times the amount of tax evaded will be imposed on taxpayers who violate the law with two aggravating circumstances; - A fine of three times the amount of tax evaded will be imposed on taxpayers who violate the law and have three or more aggravating circumstances.
Note:
The fine for individuals is half the fine for organizations committing the same violation, except for the fines for violations specified in Articles 16, 17, and 18 of Decree No. 125/2020/ND-CP.
4. Conclusion
The above is a complete guide on the latest guidelines for using invoices, provided by Expertis to organizations, business households, and individuals paying taxes using the business declaration method, so that they can be aware of and comply with state regulations.
If you need a review and consultation regarding the current usage of invoices by your business to determine if it is reasonable and compliant with legal regulations, please contact our Consulting Department for prompt and convenient assistance.