When discovering that the goods are not of the right quality, type or specification and must be returned in whole or in part, a return invoice must be issued. The following article shares experiences in handling returned goods.
1. Instructions for issuing a return invoice to the seller:
At Clause 2.8, Appendix 4 of Circular No. 39/2014/TT-BTC dated March 31, 2014 of the Ministry of Finance, providing guidance on making invoices for the sale of goods and services in a number of cases:
- “Organizations and individuals purchase goods, the seller has issued an invoice, the buyer has received the goods, but then the buyer discovers that the goods are not of the correct specifications or quality and must return all or part of the goods. When returning the goods to the seller, the establishment must issue an invoice, clearly stating on the invoice that the goods are returned to the seller due to incorrect specifications or quality, and the amount of VAT (if any)”.
- “In case the buyer is a subject without an invoice, when returning the goods, the buyer and seller must make a record clearly stating the type of goods, quantity, value of the returned goods at the price without VAT, the VAT amount according to the sales invoice (invoice number, date, month), the reason for returning the goods and the seller shall withdraw the invoice that has been made”. This record is kept together with the sales invoice as a basis for adjusting the seller’s sales and VAT declaration”.
Based on the above regulations, there are two cases of returned goods :
1.1 Buyer is a company or organization :
- When the buyer returns the goods to the seller, the buyer will create an invoice as follows:
For example:
– On June 3, 2018, fdiinvietnam.com Company purchased 01 Acer computer worth 22,000,000 VND (including 10% VAT) from Nhat Minh Furniture Company Limited.
– But on August 5, 2018, fdiinvietnam.com discovered that the machine was defective and had to be returned.
When returning goods, fdiinvietnam.com company issues return invoice as follows:
| INVOICE Form No.: 01GTKT3/001
ADDED VALUE Symbol: AP/16P Copy 2: Delivered to Buyer No: 0000155
Sales unit: fdiinvietnam.com CONSULTING SERVICES COMPANY LIMITED Tax code: 0313238628 Address: 55 Nguyen Xi, Ward 26, Binh Thanh District, Ho Chi Minh City |
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| Buyer’s name:
Unit name: NHAT MINH FURNITURE COMPANY LIMITED Tax code: 0315798642 Address: 23 Kinh Duong Vuong, Ward 11, District 6, Ho Chi Minh City Payment method: CK/TM Account number: |
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| STT | Name of goods and services | Unit of measure | Quantity | Unit price | Total amount |
| 1 | 2 | 3 | 4 | 5 | 6 = 4×5 |
| 1 | Acer Computers
(Return goods due to poor quality) |
The | 1 | 20.000.000 | 20.000.000 |
|
Total cost of goods:
VAT rate: 10% VAT amount: Total payment: |
20.000.000 | ||||
| 2.000.000 | |||||
| 22.000.000 | |||||
| Amount in words: Twenty-two million dong even | |||||
|
Buyer Seller (Sign & print full name) (Sign, stamp & print full name) (Need to check and compare when creating, delivering and receiving invoices) |
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1.2 Buyer is an individual :
-
In case of returning all goods:
+ The buyer is an individual, without an invoice to return the goods to the seller, the two parties agree to make a record clearly stating the incident and at the same time the seller will collect the invoice that has been made. - In case of partial return of goods:
+ After making a record of the original invoice withdrawal and receiving the returned goods, the seller issues a new invoice for the goods that the buyer actually accepted to buy.
For example: On September 5, 2018, Touri Shop Company sold 100 shirts to Mr. Nguyen Ba Thang for VND 2,200,000, including VAT and issued VAT invoice number 0000102, code JP/18P. However, on September 10, 2018, Mr. Thang discovered that the above goods were defective and of poor quality. Mr. Thang returned all the goods. The two parties performed the following: Prepare a record of returning the goods and collecting the invoice as follows:
2. Instructions for tax declaration for returned goods:
- Based on the returned goods invoice or adjusted invoice, the seller shall declare and adjust sales and output VAT, the buyer shall adjust purchases and input VAT in the tax period in which the returned goods invoice or adjusted invoice arises.
- Seller (payee): deduct from the goods and services sold index according to the tax rate in indexes [29] to [33] corresponding to the value of the returned invoice.
- Buyer (returning party): deduct from the purchase indicators in indicators [23] to [25] corresponding to the value of the returned invoice
For example: On May 2, 2018, Choiguitar Company sold 1 refrigerator to Thanh Dat Company and issued invoice number 0000515, symbol CG/18P, unit price 8,000,000 VND/unit, VAT rate 10% is 800,000 VND. And both parties declared tax in the second quarter of 2018.
But on October 10, 2018, Thanh Dat Company issued an invoice to return the goods to Choiguitar Company because the goods were defective and did not meet quality standards. The returned sales invoice is invoice number 0000101, symbol TD/17P with a unit price of 8,000,000 VND/piece, VAT rate of 10% is 800,000 VND.
How to handle: Declarethe return invoicein the current period, which is quarter 03/2018:
- If there is 1 invoice in the period:
+ Seller ( Choiguitar Company ) : declare negative in indicator [32] as -8,000,000 VND, indicator [33] as -800,000 VND
+ Buyer ( Thanh Dat Company ) : declare negative in indicator [23] – 8,000,000 VND, indicators [24], [25] as -800,000 VND
Note: If there are many invoices in the period, take the total declared data minus the value of goods, services and VAT corresponding to the returned invoice.
Based on the above example: If there are many invoices in a period:
+ Seller ( Choiguitar Company ) : generates 2 more output invoices with a total value of 20,000,000 VND, VAT is 2,000,000 VND then:
[32]: 20.000.000 – 8.000.000 = 12.000.000
[33]: 2.000.000 – 800.000 = 1.200.000
+ Buyer ( Thanh Dat Company ) : 03 more input invoices with a total value of 30,000,000 VND, VAT is 3,000,000 VND then:
[23]: 30.000.000 – 8.000.000 = 22.000.000
[24]: 3.000.000 – 800.000 = 2.200.000
[25]: 3.000.000 – 800.000 = 2.200.000