What is a valid invoice? Regulations on VAT invoices

What is the concept of invoice? What is a valid value added tax invoice? Regulations on issuing value added tax invoices/VAT invoices for input and output invoices.

I. What is an invoice?

To know what a valid VAT invoice is, first we need to clearly understand the concept of what an invoice is?

The concept of invoice is defined in Article 3, Decree 123/2020/ND-CP issued on October 19, 2020, effective from July 1, 2022: 

• An invoice is an accounting document created by individuals or organizations selling goods or providing services, recording information about the sale of goods or provision of services;
• Invoices are presented in the form of electronic invoices (E-invoices) or invoices printed by tax authorities.

>> See more: What is an electronic invoice?

II. What is a valid invoice?

A valid VAT invoice is an invoice that ensures compliance with the principles specified in Article 10 of Decree 123/2020/ND-CP on:

1. Invoice number;
2. Time of electronic invoice creation;
3. The time of digital signature is shown on the electronic invoice;
4. Name, address, tax code of seller;
5. Name, address, tax code of the buyer;
6. Signature of seller and signature of buyer;
7. Letters, numbers, and currency shown on the invoice;
8. Invoice name, invoice symbol, invoice number symbol;
9. Name and tax code of the organization printing invoices for invoices printed by tax authorities;
10. Tax authority code for cases where electronic invoices require a tax authority code;
11. Invoice copy name for invoices printed by tax authorities shall comply with the guidance of the Ministry of Finance;
12. Fees, charges from the state budget, commercial discounts, promotions (if any) and related contents (if any);
13. Name, unit, quantity, unit price; total amount excluding VAT, VAT rate, total VAT amount by each tax rate, total VAT amount, total payment amount including VAT.

In addition, you need to pay more attention to the content and writing of the invoice to ensure the validity and legality of the electronic invoice, specifically:

• If a business needs to add foreign words on an electronic invoice, the foreign words must be placed on the right side in parentheses ( ) or placed immediately below the Vietnamese line and have a smaller font size than the Vietnamese words;
• Some cases do not require the buyer’s digital signature or electronic signature or the seller’s seal when creating and issuing such as: electricity bills, water bills, telecommunications service bills, and bank service bills that meet the self-printing conditions.

III. Regulations on issuing value added tax (VAT) invoices

1. For sales invoices

1.1 Cases where VAT invoices must be issued

According to Article 4 of Decree 123/2020/ND-CP, regulations on invoices and documents are as follows: 

• When selling goods or providing services, organizations and individuals are obliged to issue invoices and deliver them to buyers, including goods and services used for promotional and advertising purposes, samples, gifts, exchanges or payment in lieu of wages for employees and internal consumption (except for goods circulated internally to continue the production process); 
• Exporting goods in the form of loans, borrowings or repayments and must fully record the content according to Article 10 of this Decree, electronic invoices must comply with the standard data format of the tax authority as prescribed in Article 12 of this Decree. 

1.2 Cases where VAT invoices are not required

Basically, issuing a value-added invoice is one of the mandatory requirements in business activities. However, there are still some exceptions that do not require an invoice, specifically classified as follows:

• Enterprises exporting goods for consignment to agents do not need to issue value added tax invoices;
• Enterprises exporting goods for internal circulation or consumption to continue the production and business process do not have to issue invoices or pay VAT;
• Organizations and individuals receiving compensation in cash, support money, bonuses, emission right transfer money and other financial revenues are not required to declare and pay VAT;
• Business units that produce and construct fixed assets (TSCD) to serve business activities subject to VAT, after completion, during the acceptance or handover process, do not need to issue VAT invoices.

>> See more: Regulations on issuing and not issuing value added invoices.

2. For purchase invoices, input invoices

2.1 In case the input invoice has a value of 20,000,000 VND or more

Currently, according to the law, if one of the following two cases occurs, the buyer cannot pay in cash but must pay by bank transfer to deduct input VAT and record expenses when calculating corporate income tax, specifically:

• The seller issues an output invoice of over 20,000,000 VND;
• The buyer purchases goods and services from a supplier many times on the same day, the value of each invoice is less than 20,000,000 VND but the total value of the invoices is greater than 20,000,000 VND.

2.2 Input VAT deduction for fixed assets

Clause 3, Article 13 of Circular 219/2013/TT-BTC stipulates the principle of VAT deduction for fixed assets as follows:

• VAT on fixed assets is not deductible when the assets are used in the following cases: 
  • Production of weapons and equipment for national defense and security; 
  • Fixed assets, machinery and equipment of credit institutions, enterprises operating in reinsurance, life insurance, securities, medical examination and treatment facilities, training facilities;
  • Civil aircraft and yachts not used for commercial purposes such as transporting goods, passengers, tourism, hotels, etc. 
• Value added tax on warranty and repair costs in the above cases is included in the original price;
• For fixed assets being passenger cars with 9 seats or less (except cars used for the purpose of transporting goods, passengers, or tourism) with a value exceeding VND 1.6 billion (price excluding VAT), the input VAT corresponding to the value exceeding VND 1.6 billion will not be deducted.

2.3 VAT invoices declared last year but accounted for next year

• Case 1: The enterprise has declared VAT invoices for 2022 but then discovered that it forgot to account for this invoice in the 2022 report. To comply with the matching principle, the invoice not accounted for in this report is an expense for 2022, so the taxpayer needs to account for additional, adjust and resubmit the 2022 report;
• Case 2: Invoices declared on the 2022 declaration but not included in the 2022 accounting but accounted for in 2023, the VAT of the 2022 invoice will not be deductible.

2.4 When the purchase invoice is lost

If the seller of goods or provider of services has issued an invoice in accordance with regulations, but then the seller or buyer loses, burns, or damages the second copy of the original invoice, the seller and the buyer:

• Make a record of the above incident, in the record clearly state which copy 1 of the invoice was declared and paid tax by the seller in which month, sign and clearly state the full name of the legal representative (or authorized person), and stamp (if any) on the record. The seller copies copy 1 of the invoice, the legal representative signs and stamps the copy of the invoice to give to the buyer;
• The buyer may use a copy of the invoice signed and stamped by the seller, along with a record of the loss, burning or damage of the second copy of the invoice, as accounting documents and for tax declaration. The seller and the buyer shall be responsible for the accuracy of the loss, burning or damage of the invoice.

In case the second copy of a used invoice is lost, burned, or damaged and is related to a third party (for example, the third party responsible for transporting the goods or the party transferring the invoice), the responsibility will be determined based on whether the third party is hired by the seller or the buyer and the penalty will be imposed according to regulations.

>> See more: Regulations on fines for lost invoices.

Frequently asked questions about value added invoices