CANCELED GOODS: IS ISSUING INVOICES NECESSARY?
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
- 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. - 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
- 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. - Document Retention
Businesses should retain the cancellation report and corrective invoices for potential verification or audit by tax authorities. - 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.
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