Can the branch in Vietnam issue invoices?

Whether a branch in Vietnam can issue invoices is an important matter for many businesses. To fully understand this issue, it is necessary to examine the relevant legal regulations, particularly those concerning value-added tax (VAT) invoices and the operation of branches. Through the article below, Viet An Law will address the question: Can the branch in Vietnam issue invoices?

What is a Value-Added Tax (VAT) Invoice?

Pursuant to Article 8 of Decree No. 123/2020/NĐ-CP, a value-added tax (VAT) invoice is an invoice used by organizations that declare VAT under the credit method, and is applied in the following activities:

• Sales of goods and provision of services within the domestic market;
• International transportation activities;
• Export to non-tariff zones and other cases considered as exports;
• Export of goods and provision of services to foreign countries.

Can the branch in Vietnam issue invoices?

Article 13.3(d) of Decree No. 123/2020/NĐ-CP stipulates as follows:

“…

A dependent unit, branch, store or sales agent shall prepare and send invoices to buyers, make and send the list of goods sold to the entity delivering goods or sending goods for sales (hereinafter referred to as “delivering entity”) that shall issue a VAT invoice for goods sold in reality and send it to the dependent unit, branch, store or sales agent.

…”

As such, a dependent accounting branch can issue value-added tax (VAT) invoices as a basis for payment, and for separate declaration and payment of VAT at each unit and each stage of operation.

Process for issuing invoices of branches in Vietnam

Step 1. Determine the type of branch and its entitlement to issue invoices:

Independent accounting branch:

• Have the right to issue VAT invoices as an independent enterprise.
• Must register for the use of invoices with the tax authority directly managing the branch.

Dependent accounting branch:

• May be authorized by the parent company to issue invoices.
• The scope of authorization and relevant regulations must be clearly defined.

Step 2. Prepare necessary conditions:

• Register for the use of electronic invoices with the tax authority.
• Equip the branch with e-invoicing software and internet-connected devices.
• Develop an internal procedure for invoice management and usage.
• Assign personnel to handle invoice issuance.

Step 3. Issue invoices:

• Use e-invoicing software to issue invoices in accordance with regulations.
• Accurately and fill in all required information on the invoice, including:
  • Name, address, and tax code of the Seller (branch);
  • Name, address, and tax code of the Buyer;
  • Description of goods/services, unit of measurement, quantity, unit price, and total amount;
  • VAT rate and VAT amount;
  • Total payment amount;
  • E-signature of the Seller.
• Note: Invoices must be issued at the right time as prescribed by law.

Step 4. Issue and delivery invoices:

• Digitally sign and send the invoice to the Buyer via email or other electronic means.
• Store e-invoices in accordance with legal regulations.

Step 5. Declare and pay taxes:

• An independent accounting branch must declare and pay VAT directly to the tax authority managing it.
• A dependent accounting branch shall declare VAT by the company’s internal delegation.

Important Notes:

• Always stay updated on the latest regulations on e-invoices.
• Ensure the accuracy and completeness of all information on the invoice.
• Store invoices securely and confidentially.
• Clearly distinguish between independent accounting branches and dependent accounting branches to correctly apply the relevant invoicing regulations.

Is a dependent branch required to declare VAT?

Dependent branch located in the same province or city as the headquarters

A dependent accounting branch located in the same province or city as the headquarters shall declare and pay VAT through the tax authority managing the headquarters, unless the branch is directly engaged in the sale of goods.

Under Article 13.4 of Circular No. 80/2021/TT-BTC, if a dependent branch directly sells goods and meets the conditions specified in this Clause, it must declare and pay VAT to the tax authority directly managing the branch.

Dependent branch located in a different province from its headquarters

Under Article 12.1 of Circular No. 80/2021/TT-BTC, taxpayers who conduct business or activities in multiple provinces must centralize the accounting and tax declaration in the province where the taxpayer is headquartered. The taxpayer shall declare tax and submit tax declaration dossiers to the tax authority of the headquarters and allocate the tax payable to the tax authorities of each province where business activities are conducted.

The cases eligible for allocation include:

• Activities related to e-lottery business;
• Real estate transfer activities, except for “real estate transfer activities of infrastructure and housing investment projects for transfer”;
• Construction activities according to the legal regulations regarding economic sectors and specific laws;
• Dependent units or business premises that are directly engaged in manufacturing (including processing and assembly facilities);
• Hydropower plants are located across multiple provinces.

Therefore, a dependent branch located in a different province from the head office must declare and pay VAT to the tax authority managing the branch and allocate the tax payable to the tax authorities of each province where business activities are carried out (if the branch generates revenue).

What are the sanctions for businesses that fail to issue invoices when selling goods?

Article 7.4(a) of Decree No. 125/2020/NĐ-CP regarding sanctioning forms, remedies and principles of imposition of fines for tax or invoice-related administrative violations stipulates as follows:

• A fine ranging from VND 500,000 to VND 1,500,000 for organizations, and from VND 250,000 to VND 750,000 for individuals, households, or business households shall be imposed for one of the following acts:
  • Failure to issue general invoices;
  • Failure to invoice promotional, advertising or sample goods or services; goods and services used as gifts, donations, presents, swaps or employee’s payment-in-kind wages, except for internally circulated or consumed goods for further production purposes.
• A fine ranging from VND 10,000,000 to VND 20,000,000 for organizations, and from VND 5,000,000 to VND 10,000,000 for individuals, households, or business households shall be imposed for the act of failing to issue an invoice when selling goods or providing services to another buyer.

Additionally, failure to issue invoices is considered a tax evasion act, which will result in sanctions and remedies to recover the consequences.

When shall an e-invoice be issued?

Article 9 of Decree No. 123/2020/NĐ-CP regarding the timing of invoice issuance are stated as follows:

• For the sale of goods, including the sale of state assets, confiscated property, national reserve goods: The invoice should be issued at the time of transferring the ownership or usage rights of the goods to the Buyer, regardless of whether the payment has been received or not.
• For the provision of services: The e-invoice should be issued at the time the service has been completed, regardless of whether payment has been received or not.

If the service is paid for before or during the service provision, the invoice should be issued at the time of the payment receipt.

• For multiple deliveries or the handover of service items in stages: The e-invoice should be issued at the time of each delivery or handover of goods/services corresponding to the quantity or value of the goods/services.

This is the legal advice provided by Viet An Law on whether the branch in Vietnam can issue invoices. If you have any further questions related to VAT invoice issuance, please contact Viet An Law for specific legal consultation.