I. Introduction

In the course of business operations, the cancellation of goods is a common scenario faced by many companies. The reasons for canceling goods can vary, such as product defects, expiration, or other causes. One of the crucial questions businesses often ask is whether issuing an invoice is necessary when goods are canceled. This article will analyze the legal regulations related to issuing invoices for canceled goods based on Vietnamese law.

II. Legal Regulations on Invoices

According to Vietnamese law, issuing invoices for canceled goods must comply with the provisions of the Tax Administration Law and relevant guiding documents. These regulations are clearly outlined in the following legal documents:

Law on Tax Administration No. 38/2019/QH14

Circular No. 78/2014/TT-BTC

Circular No. 39/2014/TT-BTC

Circular 26/2015/TT-BTC

Circular 96/2015/TT-BTC

Decree 119/2018/ND-CP

Decree 125/2020/ND-CP: Amending and supplementing a number of articles of Decree 119/2018/ND-CP, which clearly states updated regulations on electronic invoices, including adjusting and handling errors on electronic invoices.

III. Mandatory Invoice Issuance After November 1, 2020

Businesses are prohibited from printing and issuing paper invoices; however, if there are remaining paper invoices, they may be used alongside electronic invoices. For every sale of goods or service, regardless of the value of each transaction, an invoice must be issued to the buyer, as all businesses are required to use electronic invoices.

Therefore, from November 1, 2020, economic organizations, businesses, individuals, and household businesses must issue electronic invoices as per regulations, recording all sales and services accurately regardless of the transaction value and whether the buyer requests an invoice.

Businesses failing to issue invoices will face penalties:

• From VND 500,000 to VND 1,500,000 for not issuing comprehensive invoices according to regulations on the sale of goods and provision of services.
• From VND 10,000,000 to VND 20,000,000 for not issuing invoices when selling goods or providing services to buyers, excluding specificexceptions.

IV. Process of Issuing Invoices When Goods Are Canceled

1. Preparing a Cancellation Report
   When goods are canceled, businesses must prepare a cancellation report, which should detail the information about the canceled goods, reasons for cancellation, quantity, and value. This report is necessary to demonstrate that the goods no longer exist in stock and are no longer usable.
2. Issuing a Corrective Invoice
   After preparing the cancellation report, businesses need to issue a corrective invoice to record the cancellation. The corrective invoice must specify the reason for the adjustment, the quantity of canceled goods, and the related amount. This invoice helps adjust previously recorded revenues and VAT.

V. Illustrative Example

Assume Company ABC has a batch of goods valued at VND 100 million that was previously sold and invoiced. However, due to product defects, the entire batch needs to be canceled. Company ABC will:

• Prepare a cancellation report detailing the reason, quantity, and value of the canceled goods.
• Issue a corrective invoice specifying the reason for the cancellation, the quantity of canceled goods, and the amount to be adjusted.

Issuing the corrective invoice helps Company ABC adjust the previously recorded revenue and VAT. The cancellation report also assists in proving that the goods are no longer in stock and are no longer usable.

VI. Important Considerations

1. Ensuring Legal Compliance
   Businesses must comply with legal regulations concerning issuing corrective invoices and canceling goods. Non-compliance may result in legal and tax risks.
2. Document Retention
   Businesses should retain the cancellation report and corrective invoices for potential verification or audit by tax authorities.
3. Consulting Experts
   For complex issues related to canceling goods and issuing invoices, businesses should consult with accountants or tax experts to ensure compliance with legal regulations.

VII. Conclusion

Canceling goods is a common business scenario, and issuing a corrective invoice is crucial for ensuring accuracy and transparency in tax and accounting management. Businesses need to adhere to legal regulations regarding invoices, prepare cancellation reports, and issue corrective invoices to record canceled goods. Ensuring compliance and retaining valid documentation will help businesses avoid legal and tax risks.

VIII. About Us, Hankuk Law Firm

■ Hankuk Law Firm – Introduction

The goal of the legal services provided by HANKUK LAW FIRM is to support businesses, investors, and people. Our organization employs skilled Korean lawyers, partners, and professionals to provide legal services to businesses related to corporations and litigation.

To support the startup process, our lawyers and staff provide a wide range of services, including business law consulting, tax and immigration law consulting, real estate services, business consulting, marketing and communications, human resources, product distribution, franchise options, etc. We provide expert advice on every aspect of your business needs.

To protect the legitimate rights and interests of our clients and achieve the best results, we provide legal advice and participate in civil lawsuits related to business, labor, marriage, family, and inheritance.

■ Contact us now

For reliable and effective legal advice, please contact HANKUK LAW FIRM now. We are committed to providing you with the best possible answers and our team of experienced lawyers has extensive knowledge in many legal fields. We are always here to provide the most competent and dedicated support, whether you are dealing with contractual issues, commercial disputes or need guidance on foreign investment. HANKUK LAW FIRM is honored to have assisted hundreds of domestic and international clients in skillfully resolving complex legal issues as their trusted legal partner. Do not let legal issues hinder your success. Let us accompany you towards legal achievement and comfort. For prompt guidance and support to ensure your rights are always maintained at the highest standards, contact HANKUK LAW FIRM now.

■ Contact Hankuk Law Firm:

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