What is a forced invoice? How to handle a forced invoice

What is invoice enforcement? In which cases are businesses subject to invoice enforcement? Penalties for using illegal invoices, instructions on invoice enforcement.

I. What is invoice enforcement?

Invoice enforcement is one of the measures applied by the General Department of Taxation to organizations and enterprises to handle recoverable tax debts, which has been clearly stipulated by the National Assembly in the Law on Tax Administration.

According to Circular No. 215/2013/TT-BTC guiding the enforcement of tax administrative decisions, the Ministry of Finance has clearly stipulated tax enforcement measures for tax debt cases, including enforcement on invoices. 

According to Article 3 of Circular 215/2013/TT-BTC, it is stipulated: “Notification of invoices that are no longer valid means that the invoices will be enforced”.

II. Cases where businesses are forced to collect invoices

The reason why a business has its tax code closed or is forced to close may be due to a number of reasons such as: changing business location without notifying the tax authority; not operating at the registered business office; the deadline for submitting tax declarations and paying taxes has passed after 3 times the tax authority has sent notices without receiving any response…

➤ Cases of forced invoice collection ( according to Article 2 of Circular 215/2013/TT-BTC)

• Taxpayers owe tax or late tax payment if it exceeds 90 days from the tax payment deadline or tax payment extension deadline;
• Taxpayers who still owe taxes, fines, or late payment of taxes have committed acts of absconding or dispersing assets;
• Taxpayers who fail to comply with the decision on administrative penalties for tax violations within 10 days or in cases where the implementation period is longer than 10 days, will be subject to enforcement of the decision on administrative penalties for tax violations, except in cases where the implementation period of the decision on administrative penalties for tax violations is postponed or temporarily suspended.

➤ Enforcement by means of notification that the invoice is no longer valid (according to Article 13 of Circular 215/2013/TT-BTC)

If the subject of enforcement cannot apply enforcement measures from withdrawing money from the subject’s account at the State Treasury, credit institutions, requesting account freezing; deducting part of salary, income for individuals or in cases where these measures have been applied but still cannot collect enough tax, fines, late tax payment to the state budget, enforcement will be by means of notification that the invoice is no longer valid.

➤ Using illegal invoices in Article 22 of Circular 39/2014/TT-BTC

Using illegal invoices is the use of fake invoices, invoices that are not yet valid or have expired. In which:

• A fake invoice is an invoice created according to an invoice template issued by another organization or individual, or created with the same number of the same invoice symbol;
• Invoices that are not yet valid for use are invoices that have been created but have not yet completed the notification of invoice issuance to the tax authority;
• An expired invoice is an invoice that has completed all issuance procedures but the issuing organization or individual has notified that it will no longer be used; invoices of organizations or individuals that have stopped using the tax code (also known as closing the tax code).

➤ According to Article 16 of Decree 123/2020/ND-CP on stopping the use of electronic invoices

Organizations; enterprises; households and business individuals stop using electronic invoices with or without codes from tax authorities when:

• Tax code expired;
• In the case where the tax authority verifies and notifies the taxpayer that he/she is not operating at the registered business address;
• Organizations; enterprises; households and individuals doing business have a notice from the tax authority about stopping the use of electronic invoices to enforce tax debt collection.

III. Penalties for using illegal invoices

Penalties for using illegal invoices and illegally using invoices according to Article 28 of Decree 125/2020/ND-CP:

• Fines from VND 20,000,000 to VND 50,000,000 for acts of using illegal invoices or illegally using invoices according to the provisions of Article 4 of this Decree. Except for the following cases:

>> Using illegal invoices and documents to account for the value of purchased goods and services leads to a reduction in the amount of tax payable or an increase in the amount of tax refunded, the amount of tax will be exempted or reduced, but when the tax authority inspects and checks, the buyer proves that the violation of using illegal invoices and documents belongs to the seller, and at the same time, the buyer has also fully accounted for them according to regulations;

>> Using illegal invoices or illegally using invoices to declare taxes, reducing the amount of tax payable or increasing the amount of tax refunded or exempted.

• Remedy: Forced cancellation of used invoices.

IV. Instructions on invoice enforcement

➤ According to Official Dispatch 410/TCT-KK on handling difficulties in handling illegal invoices

➧ Remedial measures for invoices used during the time when tax authorities enforce tax debt collection measures by declaring invoices invalid:

• In case a taxpayer uses an invoice during the time the tax authority issues a decision to enforce tax debt collection by notifying that the invoice is no longer valid, it is an act of illegal invoice use. Accordingly:

>> The tax authority will collect the tax arising (if any) from the use of illegal invoices;

>> The above invoices are not valid. Therefore, the seller and buyer will be administratively sanctioned for using illegal invoices;

>> The purchasing unit is not allowed to declare VAT deduction and is not considered a reasonable expense when determining taxable income of corporate income tax;

>> The seller and the buyer must cancel invoices that have been issued incorrectly.

• After the enforcement decision expires or is revoked, after verification, the tax authority determines that there is actually a purchase and sale of goods and services, the tax authority will instruct the sales unit to issue invoices. Based on these invoices, the company’s sales and purchasing units will declare taxes according to regulations;

➧ Regarding tax declaration and calculation during the period of invoice enforcement:

In case during the time the tax authority enforces the decision to enforce tax debt collection by means of notification of invalid invoices, it is not a case of not having to declare and calculate tax as prescribed in Clause c, Article 10 of Circular No. 156/2013/TT-BCT issued on November 6, 2013 of the Ministry of Finance, so the enterprise must still declare tax according to regulations.

➤ According to Clause 2, Article 13 of Decree 123/2020/ND-CP regulating the issuance and declaration of tax obligations when tax authorities issue electronic invoices with tax codes for each occurrence; Official Dispatch No. 4118/TCT-QLN dated October 23, 2018 of the General Department of Taxation; Official Dispatch No. 5936/TCT-QLN dated December 21, 2016 of the General Department of Taxation on the use of retail invoices, instructions are as follows:

• In case the enforcement measure of invalid invoices is being applied, but if the taxpayer is eligible to be issued an electronic invoice with a tax authority code for each occurrence, the taxpayer shall submit a written request for issuance of an electronic invoice with a tax authority code according to form No. 06/ND-PSDT, Appendix IA for each occurrence for each shipment or completed project item to have a source of salary payment for workers and payment of expenses to ensure continuous production and business activities, the Tax Department of the provinces and centrally-run cities shall continue to allow the taxpayer to use each retail invoice on the condition that the taxpayer makes a written commitment to immediately pay 18% of the revenue on the used retail invoice to the state budget;
• The above guidance document does not distinguish between the sale of assets or services that may or may not use retail invoices, but only applies to units to ensure continuous production and business;
• For units that have stopped production and business and want to sell assets, the Tax Department will base on the specific situation to apply appropriate handling measures to avoid asset dissipation.

V. Some frequently asked questions about invoice enforcement