When should a business establishment that pays value-added tax using the credit-invoice method issue VAT invoices for exports in Vietnam?

When should a business establishment that pays value-added tax using the credit-invoice method issue VAT invoices for exports in Vietnam?

According to Point c, Clause 3, Article 13 of Decree 123/2020/ND-CP, the regulation is as follows:

Application of electronic invoices when selling goods and providing services

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3. Provisions on the application of electronic invoices, internal delivery cum transportation notes, and delivery notes for consignments sent for sale by agents in specific cases per management requirements are as follows:

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c) Business establishments that declare and pay value-added tax using the credit-invoice method for exports and services (including establishments processing exports) must use electronic VAT invoices for exports and services.

When goods are dispatched to the border gate or the place for export procedures, the establishment uses the internal delivery cum transportation note as required documentation for goods circulation in the market. After completing the export procedures for goods, the establishment issues the VAT invoice for the exports.

d) Business organizations that declare and pay value-added tax using the credit-invoice method when transferring goods to dependent accounting units such as branches, stores in different localities (provinces or cities under central authority) for sale or transfer between branches or dependent units; and sending goods to agencies acting as reselling agents at the correct price to receive commissions, may choose one of two methods of using invoices and documents based on their business organization and accounting:

- Use electronic value-added invoices as a basis for payment and declaration of value-added tax at each independent unit and stage;

- Use the internal delivery cum transportation note; and delivery notes for consignments sent for sale by agents as stipulated for goods sent to agencies acting as reselling agents.

Dependent accounting units, branches, stores, and agencies acting as reselling agents must issue invoices according to regulations for buyers, and simultaneously make a list of goods sold to be sent back to the delivering establishment (commonly known as the delivering establishment) so that it issues VAT invoices for the actual consumed goods delivered to dependent accounting units, branches, stores, and agents acting as reselling agents.

If establishments have large volumes or sales, the list can be compiled every 5 or 10 days. If the goods sold have different VAT rates, a separate list must be made for each tax rate group.

Dependent accounting units, branches, stores, and agencies acting as reselling agents will declare and pay value-added tax on the goods sold and can declare and deduct input VAT according to the VAT invoice from the sending establishment.

If dependent units of agricultural, forestry, and fishery business establishments registered to declare and pay value-added tax using the credit-invoice method purchase goods such as agricultural, forestry, and fishery products for transfer or sale to the main office of the business establishment, when transferring or selling, the dependent unit uses the internal delivery cum transportation note without using an electronic value-added invoice.

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Thus, following the above regulations, a business establishment that pays VAT using the credit-invoice method must issue a VAT invoice for exports after completing the export procedures for the goods.

When should a business establishment that pays VAT using the credit-invoice method issue VAT invoices for exports in Vietnam? (Image from the Internet)

What are the regulations regarding entities subject to the VAT credit-invoice method in Vietnam?

Based on Clause 2, Article 10 of the Value-Added Tax Law 2008 as amended by Clause 4, Article 1 of the Amended Value-Added Tax Law 2013:

Tax credit-invoice method

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2. The tax credit-invoice method applies to business establishments that fully implement policies on accounting, invoices, and documents as prescribed by the law on accounting, invoices, and documents, including:

a) Business establishments with annual revenue from selling goods and providing services of one billion dong or more, excluding individual business households;

b) Business establishments voluntarily registered to apply the tax credit-invoice method, excluding individual business households.

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Also, according to Clause 4, Article 7 of Decree 209/2013/ND-CP, the VAT credit-invoice method applies to the following entities:

[1] Business establishments with annual revenue from selling goods and providing services of one billion dong or more, fully implementing policies on accounting, invoices, and documents as prescribed by the law on accounting, invoices, and documents, excluding individual business households paying tax by the direct calculation method.

[2] Business establishments voluntarily registered to apply the tax credit-invoice method include:

- Enterprises and cooperatives currently operating with annual revenue from selling goods and providing services under one billion dong already implementing full policies on accounting, accounting books, invoices, and documents as prescribed by law;

- Newly established enterprises from investment projects of business establishments currently paying VAT by the credit-invoice method;

- Newly established enterprises and cooperatives undertaking investment, asset purchase, machinery, equipment procurement, foreign organizations, and individuals conducting business in Vietnam under contractor agreements, and subcontractor agreements as guided by the Ministry of Finance;

- Other economic organizations that account for input and output VAT.

[3] Foreign organizations and individuals supplying goods and services to conduct oil and gas exploration, development, and exploitation activities paying tax by the credit-invoice method deducted by the Vietnamese party on their behalf.

*Note: Business establishments involved in the trading, buying, or creating gold, silver, and gemstones must account for these activities separately to pay tax by the direct calculation method on value-added.

When does a business establishment pay value-added tax using the credit-invoice method in Vietnam?

According to Clause 4, Article 10 of Decree 209/2013/ND-CP as amended by Clause 6, Article 1 of Decree 100/2016/ND-CP:

VAT Refund

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4. A business establishment paying VAT using the credit-invoice method is eligible for a VAT refund when a change in ownership, merger, consolidation, division, separation, dissolution, bankruptcy, or termination of operations results in excess VAT paid or input VAT not fully deducted.

A business establishment in the investment phase not yet in operation but required to dissolve, go bankrupt, or terminate activities without incurring output VAT for the main business activity per the investment project is not required to adjust the declared and deducted or refunded VAT amounts. Tax declaration and payment in cases of transferring the investment project, selling assets of the investment project, or changing the purpose of production, and business activities of the investment project shall comply with the Ministry of Finance's guidelines.

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Thus, a business establishment pays VAT using the credit-invoice method when a change in ownership, merger, consolidation, division, separation, dissolution, bankruptcy, or termination of operations results in excess VAT paid or input VAT not fully deducted.