VAT invoices are not only financial documents, but also an important legal basis for establishing tax obligations between enterprises and the State. Incorrect use, missing records, or failure to issue invoices in accordance with regulations can result in enterprises being subject to tax arrears, administrative penalties, and even criminal prosecution if they use invoices illegally.
In the context of digitalization of the tax sector, electronic VAT invoices become mandatory from July 1, 2022 according to Decree 123/2020/ND-CP. Therefore, correctly understanding and applying the regulations on VAT invoices is a vital requirement for all businesses.
What is a VAT invoice?
A value-added tax (VAT) invoice is a type of invoice issued by organizations and individuals selling goods or providing services, clearly stating the selling price excluding VAT, the tax rate and the VAT amount. This is a document recording the purchase and sale transaction and is the basis for declaring and deducting input VAT.
According to Article 3 of Decree 123/2020/ND-CP:
“An invoice is a document prepared by the seller, recording information on the sale of goods and provision of services in accordance with the provisions of law.”
This type of invoice is only applicable to businesses and organizations that declare VAT using the deduction method. Business households and businesses that apply the direct method are not allowed to use VAT invoices.
What is the value added invoice for?
The role of VAT invoices is not only to confirm economic transactions but also has clear legal and financial effects:
- Is the legal basis for declaring output and input VAT.: Enterprises are allowed to deduct input VAT if they have valid invoices.
- Is a valid document recording revenue and expenses: Help businesses to do accounting in accordance with Circular 200/2014/TT-BTC.
- As evidence in transactions and disputes: VAT invoices have legal value to prove commercial transactions in case of disputes.
Therefore, storing and issuing VAT invoices at the right time and in the right form is a mandatory requirement for all businesses with production and business activities.
Latest value added invoice template
From July 1, 2022, according to Circular 78/2021/TT-BTC and Decree 123/2020/ND-CP, enterprises are required to use electronic invoices. Electronic invoices may or may not have a tax authority code, depending on the applicable subject.
Below is a comparison table of old and new VAT invoice templates:
| Criteria | Paper invoice (old) | Electronic invoice (new) |
|---|---|---|
| Form | Print on paper | In XML, PDF format |
| Release | Businesses print themselves or order printing | Through software, with or without tax authority code |
| Send to buyer | Paper copy | Electronic files via email, web portal |
| Storage | Paper records | Stored on server for at least 10 years |
The new electronic VAT invoice form has additional information such as: tax authority code, transaction code, buyer identification information, etc.
Full reference at:
Distinguish between sales invoice and VAT invoice
VAT invoices and sales invoices are two different types of documents, depending on the tax calculation method used by the business.
| Criteria | VAT invoice | Sales invoice |
|---|---|---|
| Tax method | Deduction | Direct |
| Target audience | Enterprises pay VAT by deduction method | Households, individual businesses or small enterprises apply directly |
| There is a VAT line. | Have | Are not |
| Form | Form 01GTKT | Form 02GTTT |
VAT invoices allow businesses to deduct input tax and are required in transactions between businesses that calculate tax using the deduction method.
How to issue a value added invoice?
According to Article 4 of Circular 78/2021/TT-BTC, the time of invoice issuance is the time of transfer of ownership of goods or completion of services. Some important notes:
- Invoice must be issued immediately upon provision of goods and services.
- If payment is collected in advance, an invoice must be issued at the time of collection.
- Invoices are only valid when they have a complete digital signature and authentication code.
Issuing invoices at the wrong time, to the wrong person, or creating fake invoices will be punished according to Decree 125/2020/ND-CP.
Electronic VAT invoices: an inevitable trend
From 2022, all businesses are required to use electronic invoices. Electronic VAT invoices have many benefits:
- Direct connection with tax authorities, anti-fraud.
- Save printing and storage costs.
- Convenient access and storage.
However, businesses need to use standard electronic invoice software, integrated with the accounting system to ensure data accuracy and synchronization. See details: Full package accounting and electronic invoice services at MAN
VAT invoices and accounting regime according to Circular 200
Circular 200/2014/TT-BTC is the basis for regulations on enterprise accounting regime. All transactions generating VAT invoices must be recorded in the correct account:
- Account 3331: VAT payable.
- Account 1331: Deductible VAT.
- Accounts 511, 152, 156: record revenue and related inventories.
Errors in accounting for VAT invoices will lead to incorrect financial reports and tax arrears.
Common risks and mistakes
In the actual operation process, many businesses - especially small and medium enterprises - encounter common errors related to VAT invoices without realizing their seriousness. One of the common errors is issuing invoices late compared to the time of delivery or completion of services. This delay seems small, but it violates the regulations on the time of invoice issuance according to Circular 78/2021/TT-BTC and can lead to administrative penalties.
In addition, incorrect information such as tax code, company name or buyer address is a very common mistake during the transition to electronic invoices. These errors make invoices invalid, leading to serious consequences in input tax deduction.
A more serious, intentional violation is to create false invoices to legitimize costs or inflate inputs, often with the aim of reducing taxes payable or withdrawing money from the business. This behavior not only causes the business to have its costs excluded when finalizing, but also risks being penalized under Decree 125/2020/ND-CP, with a fine of up to VND 20 million for each violating invoice, not to mention the possibility of tax arrears and late payment interest.
More importantly, if it is determined that the invoice is not actually a transaction, the enterprise may be prosecuted under Article 203 of the 2015 Penal Code (amended in 2017) for the crime of illegally printing, issuing, and trading invoices.
Therefore, instead of focusing only on formal invoicing, businesses need to focus on controlling the invoicing process, carefully reviewing information and periodically training staff to avoid systemic risks.
Conclude
In all business activities, VAT invoices are not only an administrative procedure, but also the most important legal and financial foundation. Creating and using the right type of invoice, at the right time, and fully complying with the legal procedures is the key to helping businesses protect their tax rights, ensure cash flow transparency, and avoid unnecessary risks during the inspection process.
In the context of a strongly digitized tax system, any small errors related to invoices can be detected and handled quickly. Therefore, businesses should not take the regulations on VAT invoices lightly, but need to proactively review the accounting system, standardize the process and have the support of specialized units.
If you need advice on electronic invoices, handling erroneous invoices, or want to standardize your entire invoice system according to new regulations, please connect with our team of experts at Invoice Auditing and Consulting Services – MANWith in-depth experience and standardized processes, MAN will help your business minimize risks, optimize taxes and strictly control all stages related to VAT invoices.
