Shall a VAT invoice be issued when transferring capital in Vietnam?

Shall a VAT invoice be issued when transferring capital in Vietnam?

Based on point d, clause 8, Article 4 of Circular 219/2013/TT-BTC, regulations on cases not subject to VAT are as follows:

Entities not subject to VAT

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8. The following financial, banking, and securities services:

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d) Capital transfer includes the transfer of part or all of the capital invested in another economic organization (regardless of whether a new legal entity is established or not), transfer of securities, transfer of right to contribute capital, and other forms of capital transfer as prescribed by law, including the sale of an enterprise to another enterprise for business purposes, where the purchasing enterprise inherits all rights and obligations of the selling enterprise according to the law.

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According to the above regulation, capital transfer is not liable to VAT.

According to Appendix 4 on the guidelines for issuing invoices for the sale of goods and services in certain cases attached to Circular No. 39/2014/TT-BTC (document effective until July 1, 2025), it is regulated as follows:

Appendix 4 Guidelines for issuing invoices for the sale of goods and services in certain cases

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2. In certain cases, the use and notation of invoices and records are implemented specifically as follows:

2.1. Organizations paying tax by the credit method selling goods and services that are not subject to VAT, or exempt from VAT, shall use VAT invoices; on the VAT invoice, only the sale price as the payment price is recorded, the tax rate, and VAT are not recorded and are crossed out.

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Additionally, Official Dispatch 82368/CT-TTHT in 2018 concerning VAT invoices when transferring capital issued by the Hanoi Tax Department clarifies as follows:

Based on the above regulations, the Hanoi Tax Department responds as follows:

In the case of Viet Cat Fund Management Joint Stock Company engaging in activities related to capital transfer (transfer of contributed capital, shares) with customers, this activity is not subject to VAT. When transferring capital, the company uses VAT invoices, on which only the sale price as the payment price is recorded, and the tax rate, VAT are not recorded and crossed out.

If there are any remaining issues, the unit is requested to contact Tax Inspection Department No.4 for guidance.

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Thus, according to the above regulations, a business transferring capital must issue a VAT invoice, where, specifically, on the VAT invoice, only the sale price as the payment price is recorded, the tax rate, VAT are not recorded and are crossed out.

Shall a VAT invoice be issued when transferring capital in Vietnam? (Image from the Internet)

What are the principles of issuance, management, and use of invoices and records in Vietnam?

Based on Article 4 of Decree 123/2020/ND-CP, the principles for issuance, management, and use of invoices and records are regulated as follows:

(1) When selling goods or providing services, the seller must issue an invoice to deliver to the buyer (including cases of goods and services used for promotion, advertisement, samples; goods and services used for gifts, donations, exchanges, or paid to employees and internal consumption (except for goods circulating internally to continue the production process); shipment of goods under the forms of lending, borrowing, or returning goods) and must fully record the content as prescribed in Article 10 of Decree 123/2020/ND-CP. In the case of using electronic invoices, they must comply with the data format standards of the tax authority as prescribed in Article 12 of Decree 123/2020/ND-CP.

(2) When withholding personal income tax, collecting taxes, fees, and charges, the organizations responsible for tax withholding, fee and charge collection, tax collection must issue tax withholding records, receipt vouchers for tax, fee, and charges to the individuals whose income is subject to tax withholding, taxpayers, fee, and charge payers and must fully record the content as prescribed in Article 32 of Decree 123/2020/ND-CP. In the case of electronic receipts, they must follow the data format standards of the tax authority. Individuals authorizing tax finalization are not issued a personal income tax withholding document.

For individuals who do not sign employment contracts or sign employment contracts for less than 3 months, the organization or individual paying income can choose to issue a tax withholding document for each withholding or issue one tax withholding document for multiple withholdings within one tax period.

For individuals signing employment contracts from 3 months or more, the organization or individual paying income issues a single tax withholding document for one tax period.

(3) Before using invoices, receipt vouchers, enterprises, economic organizations, other organizations, business households, individuals, organizations responsible for tax, fees, and charge collection must register for use with the tax authority or notify the issuance as prescribed in Articles 15, 34, and clause 1, Article 36 of Decree 123/2020/ND-CP.

For invoices, receipt vouchers printed by the tax authority, the tax authority shall notify issuance according to clause 3, Article 24 and clause 2, Article 36 of Decree 123/2020/ND-CP.

(4) In the course of using, organizations, business households, individuals must report the usage of invoices purchased from the tax authority, report the use of printed, self-printed invoices, or invoices purchased from the tax authority as prescribed in Articles 29 and 38 of Decree 123/2020/ND-CP.

(5) The registration, management, and use of electronic invoices and electronic records must comply with the legal provisions on electronic transactions, accounting, taxation, tax management, and this Decree.

(6) Invoice data, document data for selling goods, providing services, document data when conducting tax transactions, tax deductions, and paying taxes, fees, and charges serve as the database for tax management and provide invoice and document information for related organizations and individuals.

(7) Sellers of goods and services who are businesses, economic organizations, or other organizations may authorize a third party to issue electronic invoices for selling goods and services. The invoices authorized to a third party must still display the name of the selling unit as the authorizing party. Authorization must be confirmed by a written agreement between the authorizing party and the receiving party, containing full information about the authorized invoice (purpose of authorization; authorization duration; payment method for authorized invoices) and must be notified to the tax authority when registering to use electronic invoices.

In cases where the authorized invoice is an electronic invoice without the tax authority's code, the authorizing party must transmit the electronic invoice data to the tax authority through a service provider. The Ministry of Finance provides specific guidance on this content.

(8) Organizations collecting fees and charges may authorize a third party to issue receipts for collecting fees and charges. The receipts authorized to a third party must still record the name of the fee and charge collecting organization as the authorizing party. Authorization must be confirmed by a written agreement between the authorizing party and the receiving party, containing full information about the authorized receipt (purpose of authorization; authorization duration; payment method for authorized receipts) and must be notified to the tax authority when announcing receipt issuance.

What are prohibited acts  in the field of invoices and records in Vietnam?

Based on Article 5 of Decree 123/2020/ND-CP, the specific acts prohibited in the field of invoices and records include:

(1) For tax officials

- Causing inconvenience or difficulty for organizations and individuals purchasing invoices and records;

- Engaging in acts of concealing or colluding with organizations and individuals to use illegal invoices and records;

- Accepting bribes during inspection or audit of invoices.

(2) For organizations, individuals selling, providing goods, services, and those with related rights and obligations

- Engaging in fraudulent acts such as using illegal invoices, using invoices illegally;

- Obstructing tax officials in the execution of duties, specifically acts that harm the health and dignity of tax officials during inspections or audits of invoices and records;

- Unauthorized access, alteration, or destruction of information systems concerning invoices and records;

- Bribery or other acts related to invoices and records for unlawful gain.