What is a direct invoice? Is a direct Invoice required to declare tax in Vietnam?

What is a direct invoice in Vietnam?

Current legislation does not define what a direct invoice is. However, it can be understood that a direct invoice, also known as a direct sales invoice or a regular sales invoice (not a VAT invoice), is a document created by the seller to record information on sales or service provision according to legal regulations.

Additionally, according to Clause 2, Article 8 of Decree 123/2020/ND-CP, sales invoices are designated for organizations and individuals as follows:

(i) Organizations and individuals declaring and calculating value-added tax under the direct method for the following activities:

- Selling goods and providing services domestically;

- International transportation activities;

- Exporting into non-tariff zones and cases considered as export;

- Exporting goods and providing services abroad.

(ii) Organizations and individuals in non-tariff zones when selling goods and providing services domestically and when selling goods, providing services among organizations, individuals in non-tariff zones with each other, exporting goods, and providing services abroad. On the invoice, it clearly states "For organizations, individuals in non-tariff zones."

Is a direct invoice eligible for VAT deduction in Vietnam?

According to the regulations in Article 15 of Circular 219/2013/TT-BTC (amended by Clause 6, Article 3 of Circular 119/2014/TT-BTC, Article 10 of Circular 151/2014/TT-BTC, Article 1 of Circular 173/2016/TT-BTC, and Clause 10, Article 1 of Circular 26/2015/TT-BTC) on conditions for VAT input deduction as follows:

Conditions for Value-Added Tax Input Deduction

1. Having a legitimate VAT invoice for goods or services purchased or proof of VAT payment during import or VAT payment documents for foreign entities without legal Vietnamese status as instructed by the Ministry of Finance applied to foreign organizations and individuals conducting business or earning income in Vietnam.

2. Having non-cash payment documents for goods or services purchased (including imported goods) valued at twenty million dong or more, except for cases where the value of imported goods or services each time is less than twenty million dong, goods and services purchased each time under the invoice is less than twenty million dong including VAT, and cases where business institutions import goods as gifts from organizations and individuals abroad.

Non-cash payment documents include payment documents through the bank and other non-cash payment documents as guided in Clauses 3 and 4 of this Article.

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Therefore, to be eligible for VAT input deduction, a VAT invoice is required.

What is a direct invoice? Is a direct Invoice required to declare tax in Vietnam? (Image from the Internet)

Is a direct Invoice required to declare tax in Vietnam?

According to the guidance in Official Dispatch 3430/TCT-KK of 2014 regarding sales invoices declaration as follows:

"In response to dispatch No. 2046/CT-TTHT dated May 21, 2014, from Da Nang Tax Department requesting guidance on issues concerning sales invoices declaration, the General Department of Taxation has the following opinion:

1. On guidelines for declaration of regular sales invoices

Regular sales invoices (not VAT invoices) should not be declared on the List of Invoices, Documents of Goods, and Services Purchased (form 01-2/GTGT) for taxpayers under the deduction method.

The General Department of Taxation notes the proposal of Da Nang Tax Department and will study to amend and supplement policies suitable with the actual situation.

2. On declaration for reduction invoices

Clause 3, Article 20 of Circular No. 39/2014/TT-BTC dated March 31, 2014, stipulates: “In cases where invoices have been created and delivered to the buyer, goods have been delivered, services have been provided, and both seller and buyer have declared tax, if errors are found afterwards, the seller and buyer must prepare a record or have a written agreement specifying the errors and at the same time, the seller issues an adjustment invoice for the errors. The invoice clearly notes adjustments (increase, decrease) in the quantity of goods, selling prices, VAT rates, VAT amount for invoice number..., symbol... Based on the adjustment invoice, the seller and buyer declare adjustments for the sales receipts, output tax, and input tax. Adjustment invoices must not have negative (-) figures."

Based on the aforementioned regulations, for invoices reducing revenue, reducing tax as per regulations, the declaration should be performed as follows:

- For the seller, declare the adjustment invoice into form 01-1/GTGT and record a negative value.

- For the buyer, declare form 01-2/GTGT and record a negative value.

The General Department of Taxation has now supported the input of negative values in form 01-1/GTGT, 01-2/GTGT on the HTKK application, iHTKK.

The General Department of Taxation responds to inform the Tax Department for guiding enterprises for implementation./."

Thus, for direct invoices (not VAT invoices), they should not be declared in the VAT tax declaration for VAT taxpayers under the deduction method.