What is a Value Added Tax (VAT) Invoice?

 

What is a Value Added Tax (VAT) Invoice?

Based on Clause 1, Article 8 of Decree 123/2020/NĐ-CP, it can be understood that:

The red invoice (commonly referred to as a VAT invoice) is a document issued by the seller to the buyer to record the transaction value for tax declaration and payment purposes.

These invoices are used by organizations applying the deduction method for tax reporting, and are applicable to activities such as:

• Sale of goods and provision of services domestically;
• International transportation activities;
• Export to non-tariff zones and cases considered as exports;
• Export of goods and services abroad.

What is a VAT Invoice Used For?

So, what is a VAT invoice used for, and what role does it play for businesses?

A VAT invoice serves as a basis for calculating and declaring taxes for businesses.

This ensures transparency, supports legal compliance, and provides critical data for effective tax management.

• Tax declaration and deduction:Businesses use VAT invoices to declare input and output taxes, reducing the tax burden.
• Transaction proof:: Invoices are valid evidence during tax audits or inspections.
• Financial management: Assists businesses in tracking revenue, costs, and tax obligations transparently.

According to Circular 78/2014/TT-BTC, a VAT invoice is the basis for tax authorities to verify transaction transparency.

Notes When Issuing VAT Invoices

Issuing VAT invoices requires strict compliance with regulations to avoid legal risks.

The following are important notes:

• Ensure accurate information: Names, tax codes, and addresses of buyers and sellers must be correct.
• Issuance timing: Must be issued immediately upon delivery of goods or service provision.
• Use valid software: For e-invoices, use software approved by tax authorities.
• Storage: Retain invoices for at least 10 years for inspection purposes.

Errors in VAT invoices may result in administrative fines or rejection of tax deductions.

Content of a VAT Invoice

Below are the essential components of a VAT invoice:

• Information of the seller and the buyer: Seller and buyer information: Includes the seller’s name, address, tax code; buyer’s name, address, tax code (if applicable).
• List of goods and services: Specifies the name, unit, quantity, unit price, and total amount of goods or services.

• Invoice issuance date: The date of transaction recording and invoice issuance, typically when goods/services are delivered.

• Total pre-tax value: The total amount excluding VAT.
• Taxable value: The basis for calculating VAT to be paid or deducted.
• Applied VAT rate: Can be 0%, 5%, or 10% depending on the type of goods/services.
• VAT amount: Calculated based on the taxable value and applied rate.
• Total payment: The total amount the buyer must pay, including goods/services value and VAT.
• Signature: Legal representative or authorized person’s signature (if applicable); for e-invoices, a digital signature may substitute.

Proper and accurate invoice preparation prevents tax errors, protects legal rights, and demonstrates professionalism in business operations.

VAT Invoice Template

The VAT invoice template for individuals and organizations is stipulated in Appendix III of Decree 123/2020/NĐ-CP, including: Nghị định 123/2020/NĐ-CP, bao gồm:

(i) • (i) Download Template 01/GTGT:For organizations and individuals using the deduction method for VAT.

(ii) • (ii) Download Template 01/GTGT-ĐT: For specific organizations and enterprises.

(iii) • (iii) Download Template 01/GTGT-NT:: For specific organizations and enterprises receiving payment in foreign currency.**

Latest Regulations on VAT Invoices

• 7 notes on e-invoices under Decree 70 & Circular 32: See details.

• Tax news update – May 2025: See details.

• Invoices under 20 million VND via bank transfer from 1/7/2 See details.

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