Is an invoice with incorrect address eligible for tax deduction in Vietnam?

Is an invoice with incorrect address eligible for tax deduction in Vietnam?

Based on Clause 15, Article 14 of Circular 219/2013/TT-BTC, a business establishment is not allowed to deduct input VAT in the following cases:

Principle for Deducting Input Value Added Tax

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15. A business establishment is not permitted to deduct input VAT in the following cases:

- Invoices that do not comply with law, such as VAT invoices that do not note VAT (except for cases of special circumstances where VAT invoices that note the price as the price including VAT can be used);

- Invoices missing or inaccurately recording details such as the name, address, or tax code of the seller, making it impossible to identify the seller;

- Invoices missing or inaccurately recording details such as the name, address, or tax code of the buyer, making it impossible to identify the buyer (except as guided in Clause 12 of this Article);

- Fictitious VAT invoices, invoices that have been erased, or invoices not accompanied by goods and services;

- Invoices stating values that do not match the actual value of purchased, sold, or exchanged goods and services.

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According to Clause 12, Article 14 of Circular 219/2013/TT-BTC:

Principle for Deducting Input Value Added Tax

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12. Business establishments are allowed to declare, deduct the VAT of purchased goods or services under the form of authorization to other organizations or individuals when the invoice bears the name of the authorized organization or individual in the following cases:

a) Insurance enterprises authorize the insurance participants to repair assets; repair costs and replacement parts with VAT invoices bearing the name of the insurance participants, the insurer settles insurance premiums for the insurance participants in accordance with the insurance contract, the insurer is allowed to declare and deduct VAT corresponding to the insurance compensation payment based on the VAT invoice in the name of the insurance participant; where insurance compensation payment by the insurer to the insurance participant is valued at VND 20 million or more, it shall be made via bank transfer.

b) Before establishing a business, the founders authorize organizations or individuals to pay extraordinary items related to business establishment and procurement of goods and materials, the business is allowed to declare and deduct input VAT based on the VAT invoices in the name of the authorized organization or individual and must make payment to the authorized organization or individual via bank transfer for invoices valued at VND 20 million or more.

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Thus, except for the case stipulated in Clause 12, Article 14 of Circular 219/2013/TT-BTC, invoices with incorrect company addresses (the buyer's address) that lead to unidentifiable buyers are not eligible for input VAT deduction.

Is an invoice with incorrect address eligible for tax deduction in Vietnam? (Image from Internet)

What are regulations on handling of non-deductible VAT accounting in Vietnam?

According to Clause 9, Article 14 of Circular 219/2013/TT-BTC, the non-deductible VAT amount allows business establishments to account it as an expense for corporate income tax calculation or include it in the fixed asset's original price.

However, for the VAT amount of purchased goods and services for each transaction valued at VND 20 million or more without non-cash payment evidence, it is not accounted as an expense for corporate income tax calculation.

How to handle an invoice with an incorrect address in Vietnam?

According to Article 19 of Circular 123/2020/ND-CP regarding handling erroneous invoices:

Situation 01: If the seller discovers that the e-invoice with tax code has not been sent to the buyer contains errors, the handling is as follows:

- The seller notifies the tax authority using Form No. 04/SS-HDDT in Appendix IA issued with Decree 123/2020/ND-CP about the cancellation of the erroneously issued coded e-invoice;

- The seller issues a new e-invoice, digitally signs it, and sends it to the tax authority to issue a new invoice code to replace the erroneous invoice to send to the buyer.

- The tax authority cancels the erroneously coded e-invoice stored on the tax authority’s system.

Situation 02: When a coded or uncoded e-invoice has been sent to the buyer, and the buyer or seller discovers errors, the handling is as follows:

- If there is an error in the buyer's address but not in the tax code and other details are correct, the seller notifies the buyer of the erroneous invoice but does not reissue the invoice.

The seller notifies the tax authority of the erroneous e-invoice using Form No. 04/SS-HDDT in Appendix IA issued with Decree 123/2020/ND-CP, except for the case where the uncoded invoice has not sent the invoice data to the tax authority for the aforementioned error.

- If there is a mistake in the tax code; errors in the amount noted on the invoice, tax rate, tax amount, or goods noted on the invoice not matching specifications or quality, one can choose between the following two solutions for using e-invoices:

+ Issue an e-invoice to adjust the previously issued erroneous invoice

The e-invoice adjusting an erroneously issued e-invoice must include the words “Adjustment for Invoice Model No... sign... number... date... month... year”.

+ Issue a new e-invoice to replace the erroneously issued e-invoice

The new e-invoice replacing the erroneously issued one must include the words “Replace for Invoice Model No... sign... number... date... month... year”.

The seller digitally signs the adjusted or replacement new e-invoice and sends it to the buyer (for e-invoices without a tax code) or to the tax authority to code the new e-invoice before sending it to the buyer (for e-invoices with a tax code).

Note: For the aviation industry, exchanged or refunded invoices for transportation vouchers are viewed as adjustment invoices and do not require the details “Adjust increase/decrease for Invoice Model No... sign... date... month... year”. Aviation enterprises may issue their invoices for cases of refunding or exchanging the transportation vouchers issued by an agency.

Situation 03: When the tax authority discovers errors on an e-invoice with a tax code or an uncoded e-invoice already issued, it handles as follows:

- The tax authority notifies the seller using Form 01/TB-RSDT in Appendix IB issued with Decree 123/2020/ND-CP for the seller to check the error.

- The seller notifies the tax authority using Form 04/SS-HDDT in Appendix IA issued with Decree 123/2020/ND-CP about checking the erroneously issued e-invoice.

If the time limit indicated in Form 01/TB-RSDT in Appendix IB issued with Decree 123/2020/ND-CP expires and the seller has not notified the tax authority, the tax authority sends a second notification to the seller. If beyond the time limit of the second notice in Form 01/TB-RSDT Appendix IB the seller has not notified, the tax authority considers additional inspections on the use of electronic invoices.