GUIDANCE ON ISSUING INVOICES WITH DUAL TAX RATES FROM OTIS LAWYERS

-
Submit:

How to Issue Invoices with Two Different Tax Rates? The tax reduction regulation, effective from July 1, 2024, under Decree 72/2024/ND-CP, has raised several issues in the invoicing process. When selling goods or providing services, if a single transaction includes items subject to tax reduction alongside those without, or items with varying tax rates, accountants should pay attention to how tax rates are recorded.

Regulations for Issuing Invoices with Two Different Tax Rates  

To address the issue of dual tax rates on invoices, accountants must understand the regulations on displaying tax rates on invoices.

Regulations on Recording VAT Rate and VAT Amount on Electronic Invoices  

According to Clause 6, Article 10 of Decree 123/2020/ND-CP, the requirements for recording VAT rate and VAT amount are clearly specified as follows:  

  • Name, unit, quantity, selling price of goods or services, total amount before VAT, VAT rate, total VAT for each tax rate, total VAT, and total payment amount inclusive of VAT.
  • VAT Rate: The VAT rate shown on the invoice should correspond to each specific good or service according to VAT regulations.
  • Total amount before VAT, total VAT for each rate, total VAT, and total amount inclusive of VAT must be displayed in Vietnamese Dong using Arabic numerals, except when foreign currency sales are recorded without converting to Vietnamese Dong.

Additionally, under Article 11 of Circular 219/2013/TT-BTC, VAT declaration for businesses with goods or services at different VAT rates states:  

“10% VAT Rate 

... 

Businesses selling multiple types of goods or services with different VAT rates must declare VAT for each applicable rate per product or service; if this is not done, the highest VAT rate among the items will apply.”

Thus, businesses with goods or services at different VAT rates must declare VAT according to the specific rate for each item, and the electronic invoice must clearly indicate the applicable VAT rate for each item and the total VAT amount for each tax rate.

Recording Tax Rates on Electronic Invoices  

According to Appendix 5 attached to Decision 1450/QD-TCT, as amended by Clause 17, Appendix attached to Article 1 of Decision 1510/QD-TCT, the tax rates on VAT invoices issued electronically should be recorded as follows:

No.

Tax Rate

Content on Electronic Invoice

1

0%

0%

2

5%

5%

3

8%

8%

4

10%

10%

5

VAT

KCT

6

Non-taxable

KKKNT

7

Other cases:

 
 

If a specific VAT rate can be determined, the taxpayer must specify the rate in the format "KHAC: AB.CD%", where A, B, C, D are integers from 0 to 9.

KHAC: AB.CD%

 

If the taxpayer is a Vietnamese business paying taxes on behalf of a foreign contractor or subcontractor, a specific rate is not required; “KHAC” is sufficient.

KHAC

Regulations for Invoices with Different Tax Rates  

Per Clause 4, Article 1 of Decree 72/2024/ND-CP:  

"In cases where businesses apply different tax rates to goods or services sold, the VAT invoice must specify the tax rate for each item as outlined in Clause 3 of this Article."

Thus, if a business sells goods or provides services at varying tax rates, the VAT invoice must clearly display the specific tax rate for each good or service in accordance with Clause 3 of Decree 72/2024/ND-CP.

Guidance on Issuing Invoices with Two Tax Rates  

Guidance on issuing invoices with two tax rates is detailed in Decree 72/2024/ND-CP, broken down into two scenarios:

For Businesses Calculating VAT Using the Deduction Method  

Under Point a, Clause 2, Article 1 of Decree 72/2024/ND-CP, businesses calculating VAT using the deduction method apply an 8% VAT rate for goods and services specified in Clause 1, Article 1 of the Decree. When issuing invoices with different rates, sellers must display:

  • The specific VAT rate for each item or service.
  • Record “8%” for tax-reduced goods and “10%” for non-reduced goods.
  • Display the VAT amount and total payment due for each tax rate.

For Businesses Calculating VAT Using the Direct Method  

According to Point b, Clause 2, Article 1 of Decree 72/2024/ND-CP, businesses (including individuals) that calculate VAT as a percentage on revenue receive a 20% reduction in the percentage rate for goods and services eligible for VAT reduction, as outlined in Clause 1 of this Article.

When issuing invoices for goods or services with tax reduction:

  • In the "Total Amount" column, display the full pre-discount amount.
  • In the "Total Goods and Services Amount" line, show the amount after the 20% discount and note “reduced by… (amount) in line with 20% rate reduction under Resolution 142/2024/QH15.”

huong-dan-xuat-hoa-don-2-loai-thue-suat-tu-otis-kr (6).jpg

How to Issue Invoices with Taxable and Non-taxable Items  

Per section 1 above, when issuing electronic invoices that include both VAT-applicable and non-VAT-applicable items, sellers can consolidate these on one electronic invoice for the buyer. The invoice must:

  • Separate each line by tax rate for VAT-applicable items and non-VAT-applicable items.
  • Clearly show the total VAT per rate for items with different rates.

The invoice must include:

  • Total amount before VAT.
  • VAT Rate: Use "KCT" for non-VAT items.
  • Total VAT by rate.
  • Total VAT amount.
  • Total payment including VAT.

Above is the guidance for issuing invoices with two tax rates. Businesses must ensure that invoices for goods or services with multiple rates display the specific tax rate for each item per Decree 72/2024/ND-CP.

For any questions or comments, please contact:
OTIS AND PARTNERS LAW FIRM
Office address: 2nd Floor, CT3 Building, Yen Hoa Park View Urban Area, No. 3 Vu Pham Ham Street, Yen Hoa Ward, Cau Giay District, Hanoi
Email: [email protected]
Hotline: (+84)987748111

Comments