What should taxpayers do when issuing an invoice with the VAT rate which is not yet reduced in Vietnam?

What should taxpayers do when issuing an invoice with the VAT rate which is not yet reduced in Vietnam?

Based on the provisions of Clause 5, Article 1 of Decree 72/2024/ND-CP as follows:

5. If a business entity has issued invoices and declared according to the tax rate or percentage to calculate VAT which has not been reduced as per the regulations in this Decree, the seller and buyer shall process the already issued invoice according to the legal regulations on invoices and documents. Based on the processed invoice, the seller declares and adjusts the output tax, and the buyer declares and adjusts the input tax (if applicable).

Thus, in the case of mistakenly issuing a 10% VAT invoice for goods and services eligible for a VAT reduction to 8%, the following steps should be taken:

(1) The seller and buyer process the issued invoice in accordance with the legal regulations on invoices and documents.

(2) Based on the processed invoice, the seller declares and adjusts the output tax, and the buyer declares and adjusts the input tax (if applicable).

How to handle an invoice with the VAT rate which is not yet reduced in Vietnam?

The method to handle an 8% VAT invoice wrongly issued as a 10% VAT invoice in 2024 is implemented according to the provisions in Article 19 of Decree 123/2020/ND-CP as follows:

(1) If the seller discovers that the electronic invoice, which has been coded by the tax authority but not yet sent to the buyer, contains errors:

If the seller discovers that the electronic invoice coded by the tax authority has errors regarding the tax rate, the seller shall notify the tax authority using Form No. 04/SS-HDDT Appendix IA issued with Decree 123/2020/ND-CP regarding the cancellation of the erroneously issued electronic invoice and create a new electronic invoice, digitally sign it and send it to the tax authority to issue a new invoice code replacing the mistakenly issued one to send to the buyer.

The tax authority shall cancel the electronic invoice with errors coded and stored on the tax authority's system.

(2) If the electronic invoice coded or not coded by the tax authority has been sent to the buyer and contains errors that the buyer or seller identifies, there are two handling options:

- First option: The seller issues an electronic invoice to adjust the invoice issued with errors regarding the tax rate. If the seller and buyer agree on drafting an agreement before issuing an adjustment invoice for the invoice with errors, then both parties draft an agreement noting the errors, afterwards, the seller issues an electronic invoice to adjust the invoice with errors in terms of the tax rate.

The electronic invoice adjusting the previously issued invoice with errors regarding the tax rate must contain the phrase “Adjustment for Invoice Form No... symbol... number... date... month... year.”

- Second option: The seller issues a new electronic invoice to replace the electronic invoice with errors regarding the tax rate unless the seller and buyer agree to draft an agreement before issuing the replacement invoice for the invoice with errors, in which case both parties draft the agreement, then the seller issues a new electronic invoice replacing the one issued with errors regarding the tax rate.

The new electronic invoice replacing the erroneously issued invoice must contain the phrase “Replacement for Invoice Form No... symbol... number... date... month... year.”

The seller digitally signs the new electronic invoice adjusting or replacing the erroneously issued electronic invoice in terms of the tax rate and then sends it to the buyer (for electronic invoices not coded by the tax authority) or sends it to the tax authority for coding to send to the buyer (for electronic invoices coded by the tax authority).

(3) If the tax authority discovers that an electronic invoice coded or not coded by the tax authority has been issued with errors:

The tax authority notifies the seller using Form No. 01/TB-RSDT Appendix IB issued with Decree 123/2020/ND-CP for the seller to check the errors.

According to the notification deadline stated on the form, the seller implements notification with the tax authority as provided in Decree 123/2020/ND-CP at Appendix IA issued with Decree 123/2020/ND-CP regarding the examination of erroneously issued electronic invoices.

+ If the notification period expires and the seller has not notified the tax authority, the tax authority continues to notify a second time to the seller using Form No. 01/TB-RSDT Appendix IB issued with Decree 123/2020/ND-CP.

+ If the second notification period, as per the form No. 01/TB-RSDT Appendix IB issued with Decree 123/2020/ND-CP, expires without the seller notifying, the tax authority considers transferring the case to an inspection of electronic invoice usage.

Note: Within one working day, the tax authority notifies the receipt and the result of processing according to Form No. 01/TB-HĐSS Appendix IB issued with the said Decree. The canceled electronic invoice has no usage value but must still be stored for reference.

What should taxpayers do when issuing an invoice with the VAT rate which is not yet reduced in Vietnam? (Image from Internet)

Which goods and services are not eligible for VAT reduction from 10% to 8% in Vietnam in 2024?

Pursuant to Article 1 of Decree 72/2024/ND-CP, VAT reduction for groups of goods and services currently applying a 10% tax rate is subject to exceptions, such as the following goods and services:

- Telecommunications, financial services, banking, securities, insurance, real estate business, metals and pre-cast metal products, mineral products (not coal mining), coke, refined petroleum, chemical products.

- Goods and services subject to special consumption tax.

- Information technology according to IT law.

Note:

- The VAT reduction for each type of goods and services is uniformly applied to import, production, processing, and commercial business stages.

+ For extracted coal sold (including cases where extracted coal is then screened and classified in a closed process before sale) which is subject to VAT reduction.

+ Coal in Appendix I issued with Decree 72/2024/ND-CP, at stages other than initial extraction sale, is not eligible for VAT reduction.

- General corporations and economic groups conducting closed processes before sale are also subject to VAT reduction for extracted coal sold.

- For goods and services mentioned in Appendices I, II, and III issued with Decree 72/2024/ND-CP that are non-VAT subjects or subjects to a 5% VAT rate according to the Law on Value Added Tax 2008, it shall follow the provisions of the Law on Value Added Tax 2008 and not be eligible for a VAT reduction.