Mr. Duong asked, in this case, does his company have to issue a value-added electronic invoice (VAT) to foreign customers as specified at Point b, Clause 3, Article 13 of Decree No. 123/2020/ND-CP or not?

The export entrusting party for Mr. Duong's company is an individual who does not have a tax code, so it is not possible to issue a VAT invoice or a sales invoice to the trustee as specified in Article 13 of Decree No. 123/2020/ ND-CP. So, in this case, what kind of documents must the export entrusting party use to replace the electronic invoice?

Thu Duc, Tax Department of Ho Chi Minh City responded to this problem as follows:

Pursuant to the Law on Tax Administration No. 38/2019/QH14 dated June 13, 2019:

Article 30 stipulates that the subject of tax registration and grant of tax identification numbers:

"1. Taxpayers must register for tax and be granted a tax identification number by the tax authority before commencing production and business activities or incurring obligations to the state budget. Tax registrants include:

a) Enterprises, organizations and individuals shall register for tax according to the one-stop-shop mechanism together with business registration, registration of cooperatives, business registration under the provisions of the Law on Enterprises and other regulations of relevant laws;

b) Organizations and individuals that do not fall into the cases specified at Point a of this Clause shall make tax registration directly with tax authorities according to regulations of the Minister of Finance.

Article 91 provides for the application of e-invoices when selling goods and providing services:

"... 3. Business households and individuals falling into the cases specified in Clause 5, Article 51 of this Law and cases in which revenue can be determined when selling goods or services using e-invoices with the code of tax authorities when selling goods or providing services.

4. Business households and individuals that do not meet the conditions to use e-invoices with the tax authority's code specified in Clauses 1 and 3 of this Article but need an invoice to deliver to customers; or in case an enterprise, economic organization or other organization is approved by the tax authority to issue an e-invoice for delivery to a customer, the tax authority shall issue an e-invoice with a code according to each time it arises and must declare tax, pay tax before the tax authority issues an e-invoice each time it is incurred.

Pursuant to Clause 2, Article 4 of Circular No. 105/2020/TT-BTC dated December 3, 2020 of the Ministry of Finance guiding tax registrants:

"2. Taxpayers subject to direct tax registration with tax authorities, including:

.. i) Households and individuals engaged in production and trading of goods and services, including individuals from countries sharing a land border with Vietnam carry out activities of buying, selling and exchanging goods at border markets, border-gate markets and markets in border-gate economic zones (hereinafter referred to as business households and business individuals)".

Pursuant to the Government's Decree No. 123/2020/ND-CP dated October 19, 2020 on invoices and documents:

Clause 1, Article 4 provides for the principles of making, managing and using invoices and documents:

“1. When selling goods or providing services, the seller must issue an invoice to deliver to the buyer (including cases where goods and services are used for promotion, advertising, or samples; goods and services used for giving, exchanging, paying wages for employees and for internal consumption (except for goods circulating internally to continue the production process); export goods in the form of loans, or return of goods) and must fully record the contents as prescribed in Article 10 of this Decree. In case of using e-invoices, it must follow the standard data format of the tax authorities as prescribed in Article 12 of this Decree”.

Article 13 provides for the application of e-invoices when selling goods and providing services:

"… 2. Regulations on the issuance and declaration of tax liability when the tax authority issues an electronic invoice with the tax authority's code each time it is incurred is as follows:

a) Type of invoice issued for each time it is generated

a.1) Issue an electronic invoice with the tax authority's code for each time it is generated as a sales invoice in the following cases:

- Households and individuals doing business as prescribed in Clause 4, Article 91 of the Law on Tax Administration No. 38/2019/QH14 do not satisfy the conditions to use e-invoices with tax authority's code but need an invoice for customers;

… 3. Regulations on application of e-invoices, delivery notes cum internal transportation, and delivery notes sent to agents for sale in some specific cases according to management requirements are as follows:

… b) In case of entrusting the export of goods:

- When exporting goods and delivering them to the entrusting establishment, the establishment having the goods entrusted to export shall use the ex-warehousing-cum-internal transportation note.

- When the goods have been actually exported, certified by the customs authority, based on the collated documents and certified on the quantity and value of the goods actually exported by the entrusting establishment, establishments having goods entrusted for export shall issue VAT electronic invoices for tax declaration and payment, VAT refund or sales electronic invoices. Establishments that receive export entrustment use VAT electronic invoices or sales electronic invoices to export to foreign customers.

Based on the above provisions, the Thu Duc Tax Department replied according to the following principles:

When selling goods or providing services, the seller must issue an invoice to deliver to the buyer as prescribed in Clause 1, Article 4 of Decree No. 123/2020/ND-CP. In case of entrusting the export of goods, comply with the provisions of Point b, Clause 3, Article 13 of Decree No. 123/2020/ND-CP above. Accordingly, the export entrustment agency uses VAT electronic invoices or sales electronic invoices to export to foreign customers.

In case an individual is a taxpayer, he/she must register for a tax and be granted a tax identification number by the tax authority before commencing production and business activities or incur obligations to the state budget as prescribed in Clause 1, Article 30 of the Law on Tax Administration No. 38/2019/QH14 and apply e-invoices when selling goods or providing services as prescribed in Clause 3, Clause 4 of Article 91 of the Law on Tax Administration No. 38/2019/QH14.

Thu Duc Tax Department informed Mr. Tran Quang Duong to know and suggested that he should base on the actual situation and compare with the provisions of law to comply with regulations.