Shall sellers issue invoices when selling goods used for promotion in Vietnam?

Shall sellers issue invoices when selling goods used for promotion in Vietnam?

Pursuant to Clause 1, Article 4 of Decree 123/2020/ND-CP regulating the principles of preparing, managing, and using invoices and documents as follows:

Principles of preparing, managing, and using invoices and documents

1. When selling goods or providing services, the seller must prepare an invoice to hand over to the buyer (including cases where goods, services **are used for promotion, advertising, sampling; goods, services used for giving, gifting, exchanging, paying wages to employees and internal consumption (except for internally transferred goods to continue production); goods exported in the form of loans, borrowings, or returns) and must fully record the content as specified in Article 10 of this Decree. If using electronic invoices, they must follow the standard data format of the tax authority as prescribed in Article 12 of this Decree.

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Thus, promotional goods must have tax invoices prepared as regulated.

Shall sellers issue invoices when selling goods used for promotion in Vietnam? (Image from the Internet)

When is the time for calculating VAT in Vietnam?

According to the provisions of Article 8 of Circular 219/2013/TT-BTC, the time for calculating VAT is specifically guided as follows:

- For the sale of goods, it is the time of transferring ownership or usage rights of the goods to the buyer, regardless of whether the money has been collected or not.

- For providing services, it is the time of completing the provision of services or the time of issuing the service provision invoice, regardless of whether the money has been collected or not.

For telecommunications services, it is the time of completing the reconciliation of service connection charges according to the economic contract between telecommunications service providers, but no later than 2 months from the month the service connection charges arise.

- For electricity and clean water supply activities, it is the date of recording the consumption index on the meter for billing purposes.

- For real estate business, infrastructure construction, house construction for sale, transfer, or lease, it is the time of collecting money according to the project's implementation progress or the payment schedule recorded in the contract.

Based on the collected amount, the business establishments declare the output VAT incurred during the period.

- For construction, installation, including ship assembly, it is the time of acceptance, handover of the project, project components, or completed construction volume, regardless of whether the money has been collected or not.

- For imported goods, it is the time of customs declaration registration.

Shall a business establishment receiving money from another entity to provide a service such as sales promotion declare value-added tax in Vietnam?

According to Clause 1, Article 5 of Circular 219/2013/TT-BTC regulating cases where declaration, calculation, and payment of VAT are not required as follows:

Cases where declaration, calculation, and payment of VAT are not required

1. Organizations and individuals receiving compensation in money (including compensation for land and assets on land when land is recovered according to the decision of the competent state authority), bonuses, support money, emission rights transfer proceeds, and other financial receipts.

Business establishments receiving compensation, bonuses, support money, emission rights transfer proceeds, and other financial receipts shall issue receipts according to regulations. The business establishments disbursing the money shall issue payment documents according to the purpose of the disbursement.

In cases of compensation in the form of goods or services, the compensating establishment must issue an invoice and declare, calculate, and pay VAT as for the sale of goods, services; the establishment receiving compensation shall declare and deduct VAT as prescribed.

In cases where business establishments receive money from organizations or individuals to perform services for organizations or individuals such as repairs, warranties, promotions, advertisements, they must declare and pay tax as prescribed.

Example 10: P&C LLC receives interest from buying bonds and dividends from buying stocks of other businesses. P&C LLC is not required to declare or pay VAT for the interest from buying bonds and the dividends received.

Example 11: Company A receives compensation of 50 million VND from Company B for contract cancellation. Company A issues a receipt and is not required to declare or pay VAT for this amount.

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Thus, according to the above regulation, if a business establishment receives money from another entity to provide a service such as sales promotion, it must declare value-added tax.