What is the guidance on issuing an invoice when returning goods in Vietnam under Decree 123?

Is an invoice required when returning goods in Vietnam?

According to Clause 1, Article 4 of Decree 123/2020/ND-CP, when selling goods or providing services, the seller must issue an invoice to the buyer (including instances where goods or services are used for promotion, advertising, sample goods, goods, and services given, donated, exchanged, paid as wages to employees, or for internal consumption (except for internal circulation goods to continue production); export goods in forms such as lending, leasing, or returning goods).

The invoice must fully record the contents as per regulations in Article 10 of Decree 123/2020/ND-CP. In the case of using electronic invoices, they must comply with the standardized data format of the tax authority as stipulated in Article 12 of Decree 123/2020/ND-CP.

Thus, when goods sold are returned, an invoice must be issued for the returned goods.

Shall the buyer or the seller issue the invoice when returning goods in Vietnam?

Based on Official Dispatch 67049/CTHN-TTHT of 2023 providing guidance on invoices when returning goods by the Hanoi Tax Department as follows:

Based on the above regulations, in the case where Fujimart Vietnam Business Co., Ltd. is the purchaser buying goods from the supplier (the seller), the seller has issued an invoice, the buyer has received the goods, but subsequently, the buyer finds that the goods do not meet specifications, quality, and must return the goods, the seller issues an invoice for the returned goods as stipulated in Clause 1, Article 4 of Decree No. 123/2020/ND-CP dated October 19, 2020, of the Government of Vietnam. The seller and the buyer must agree to clearly state the return of goods (the buyer does not need to issue an invoice when returning the goods). Based on the invoice for the returned goods, the seller and the buyer make declarations in the tax period in which the invoice when returning goods arises.

It is recommended that the Company bases its actions on legal regulations and aligns them with the actual situation at the Company to perform correctly according to regulations.

In the process of implementing tax policy, if there are any issues, the Company can refer to the guidance documents of Hanoi Tax Department posted on the website http://hanoi.gdt.gov.vn or contact Inspection Team No. 8 for support.

Thus, if the seller has issued an invoice and the buyer has received the goods, but the buyer detects that the goods do not conform to the agreed specifications or quality, and must return all or part of the goods, then upon receiving the returned goods, the seller issues an invoice for the returned goods according to Clause 1, Article 4 of Decree 123/2020/ND-CP.

What is the guidance on issuing an invoice when returning goods in Vietnam under Decree 123? (Image from the Internet)

What is the guidance on issuing an invoice when returning goods in Vietnam under Decree 123?

Based on Official Dispatch 8999/CTTPHCM-TTHT of 2023 concerning electronic invoices from the Ho Chi Minh City Tax Department as follows:

2. Regarding issuing invoices when the buyer returns goods due to incorrect specifications, quality:

When selling goods or providing services, the seller must issue an invoice to deliver to the buyer (including instances where goods or services are for promotion, advertising, sample goods, goods, and services given, donated, exchanged, paid as wages to employees or for internal consumption (except for internal circulation goods to continue production); exporting goods in forms of lending, leasing, or returning goods) and must record the full content on the invoice as regulated; electronic invoices must follow the standardized data format from the tax authority.

In cases where an organization or individual purchases goods, the seller has issued an invoice, the buyer has received the goods, but later discovers the goods do not meet the specifications or quality and has to return all or part of the goods, the seller issues an invoice for the returned goods to adjust or replace the invoice already issued. The seller and the buyer must agree to clearly state the goods returned.

Therefore, in order to issue an invoice when returning goods, the seller follows these steps:

Step 01: Seller issues an invoice when returning goods

When receiving returned goods, the seller can choose one of two methods:

(i) Issue an electronic invoice to adjust down the quantity for the returned goods

+ The seller issues an electronic invoice adjusting the previously issued incorrect invoice. In cases where the seller and the buyer have an agreement about issuing a document before adjusting the issued incorrect invoice, the seller and the buyer should draft an agreement clearly stating the error, and then the seller issues an electronic invoice to adjust the previously issued incorrect invoice.

+ The electronic invoice adjusting the previously issued electronic invoice must include the phrase “Adjustment for Invoice Form Number... symbol... number... date... month... year”.

(ii) Issue a new electronic invoice replacing the previously issued invoice for sold goods

+ The seller issues a new electronic invoice replacing the electronically issued invoice that contains errors, except in cases where the seller and buyer have an agreement to draft a document before replacing the previously issued incorrect invoice; then the seller and the buyer should prepare an agreement clearly stating the error, followed by the issuance of a new electronic invoice replacing the previously issued incorrect invoice.

+ The new electronic invoice replacing the previously issued electronic invoice must have the phrase “Replacing Invoice Form Number... symbol... number... date... month... year”.

(Based on Clause 2, Article 19 of Decree 123/2020/ND-CP)

Step 02: Digitally sign and send the adjustment/replacement electronic invoice to the buyer

The seller digitally signs the new electronic invoice adjusting or replacing the previously issued incorrect invoice and then sends it to the buyer (in cases using electronic invoices without the tax authority’s code) or sends it to the tax authority for coding, then sends to the buyer (in cases using electronic invoices with the tax authority’s code).

Step 03: Tax declarations

Based on the invoice when returning goods, the seller and the buyer perform tax declarations in the tax period in which the invoice when returning goods arises.