Shall the invoice be issed when receiving advance payment from customers in Vietnam?

Shall the invoice be issed when receiving advance payment from customers in Vietnam?

According to Article 9 of Decree 123/2020/ND-CP regulating the timing of invoice issuance as follows:

Timing of Invoice Issuance

1. The timing for issuing invoices for the sale of goods (including the sale of state assets, confiscated assets, assets added to the state budget, and sale of national reserve goods) is the moment of transferring the ownership or right to use the goods to the buyer, regardless of whether the payment has been received or not.

2. For services, the invoice should be issued at the time of service completion, regardless of whether payment has been received. In cases where the service provider collects money in advance or during the provision of services, the invoice shall be issued at the time of collection (excluding deposits or advances to ensure the execution of contracts for services such as accounting, auditing, financial consulting, tax consulting; valuation; survey, technical design; supervision consultancy; construction investment projects).

3. In cases where goods are delivered multiple times or service items are handed over in stages, each delivery or handover requires issuing an invoice for the equivalent quantity and value of goods or services delivered.

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Thus, the timing for issuing an invoice is when the transfer of ownership or right to use the goods to the buyer occurs, regardless of whether payment has been received. Therefore, if only an advance payment is collected, without delivering the goods, an invoice issuance is not necessary.

What are the penalties for failing to issue an invoice in Vietnam?

Based on Article 24 of Decree 125/2020/ND-CP regulating penalties for violations concerning invoice issuance in the sale of goods and services as follows:

Penalties for Violations Regarding Invoice Issuance in Sale of Goods and Services

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2. A fine of between 500,000 VND to 1,500,000 VND for one of the following acts:

a) failing to issue a composite invoice as per the regulations on invoices for selling goods or providing services.

b) failing to issue an invoice for goods and services used for promotion, advertising, as samples; for goods and services given, gifted, exchanged or used as payment to employees, excluding those for internal circulation, internal consumption for continued production.

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5. A fine of between 10,000,000 VND to 20,000,000 VND for failing to issue an invoice for the sale of goods or provision of services to the buyer as required, except for the act specified at point b of clause 2 of this Article.

6. Remedial actions required: Compulsory issuance of invoices for the acts specified at point d of clause 4 and clause 5 of this Article at the buyer's request.

Thus, the failure to issue an invoice when selling goods is penalized as follows:

- If a composite invoice is not issued as per the regulations on invoices for selling goods or providing services or if an invoice is not issued for goods or services used for promotion, advertising, as samples, or for those given, gifted, exchanged, or used as payment to employees (excluding internal circulation and consumption for continued production), the administrative fine ranges from 500,000 VND to 1,500,000 VND.

- If an invoice is not issued when selling goods or providing services to the buyer, the administrative fine ranges from 10,000,000 VND to 20,000,000 VND.

Additionally, violators are subject to remedial actions requiring invoice issuance upon the buyer's request.

Note: The above penalty applies to organizations. If individuals violate the regulations, the fine is half that for organizations. For taxpayers who are households or business households, the fine is similar to that for individuals.

What is the use of VAT invoices in Vietnam?

Based on clause 1 of Article 8 of Decree 123/2020/ND-CP regulating types of invoices as follows:

Types of Invoices

Invoices as regulated in this Decree include the following types:

1. Value-added tax (VAT) invoice is for organizations declaring VAT by the deduction method for activities including:

a) Sale of goods and services within the domestic market;

b) International transportation activities;

c) Exports to non-tariff zones and cases deemed as exports;

d) Export of goods and services abroad.

2. Sales invoice is for organizations and individuals as follows:

a) Organizations and individuals declare, calculate VAT by the direct method for activities including:

- Sale of goods and services within the domestic market;

- International transportation activities;

- Exports to non-tariff zones and cases deemed as exports;

- Export of goods and services abroad.

b) Organizations and individuals in non-tariff zones selling goods and services into the domestic market and when selling goods and providing services among non-tariff zones, exporting goods and providing services abroad, invoices must state clearly "For organizations and individuals in non-tariff zones."

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Thus, VAT invoices are utilized for the following activities:

- Sale of goods and services within the domestic market;

- International transportation activities;

- Exports to non-tariff zones and cases deemed as exports;

- Export of goods and services abroad.