General Department of Taxation

Bac Giang Tax Department

SOCIALIST REPUBLIC OF VIETNAM
Independence - Freedom - Happiness

No: 609/CTBGI-TTHT
Regarding invoice issuance

Bac Giang, January 23, 2024

To: YADEA Scientific and Technical Co., Ltd. (Vietnam)
Address: Lot CN-02, Tan Hung Industrial Park, Xuong Lam Commune, Lang Giang District, Bac Giang Province
Tax ID: 2400966553

On January 17, 2024, Bac Giang Tax Department received Official Letter No. 202401-01-YD dated January 16, 2024 from YADEA Scientific and Technical Co., Ltd. (hereinafter referred to as the Company), inquiring about the time of issuing invoices, the invoice value, currency, and exchange rate stated on the invoices. Regarding this matter, Bac Giang Tax Department has the following comments:

According to Article 328 of the Civil Code No. 91/2015/QH13 issued by the National Assembly, which stipulates the regulations on deposits:

"Article 328. Deposit

1. A deposit is when one party (hereinafter referred to as the depositor) gives the other party (hereinafter referred to as the recipient) a sum of money or precious metal, gemstones, or other valuable assets (hereinafter collectively referred to as the deposit assets) within a certain time to guarantee the conclusion or performance of the contract.

2. If the contract is concluded and performed, the deposit asset will be returned to the depositor or deducted to fulfill the payment obligation; if the depositor refuses to conclude or perform the contract, the deposit asset belongs to the recipient; if the recipient refuses to conclude or perform the contract, they must return the deposit asset to the depositor and an amount equivalent to the value of the deposit asset, unless otherwise agreed in the contract."

According to Article 18 of the Enterprise Law No. 59/2020/QH14 dated June 17, 2020, which stipulates pre-registration contracts for enterprises:

"Article 18. Pre-registration contracts for enterprises

1. The founders of the enterprise may sign contracts for the establishment and operation of the enterprise before and during the enterprise registration process.

2. If the enterprise is granted a Certificate of Enterprise Registration, the enterprise must continue to perform the rights and obligations arising from the signed contract as stipulated in Clause 1 of this Article, and the parties must transfer the rights and obligations according to the contract in accordance with the Civil Code, unless otherwise agreed in the contract.

3. If the enterprise is not granted a Certificate of Enterprise Registration, the party signing the contract as stipulated in Clause 1 of this Article is responsible for performing the contract; if others participate in the establishment of the enterprise, they will also jointly bear responsibility for performing the contract."

According to Article 9 of Decree No. 123/2020/ND-CP dated October 19, 2020 of the Government on invoices and receipts:

• Article 9 regulates the time of issuing invoices:
  "Article 9. Time of issuing invoices:
  …

2. The time of issuing invoices for service provision is the time when the service provision is completed, regardless of whether payment has been received. If the service provider receives payment before or during service provision, the time of issuing the invoice is the time of payment (excluding cases of receiving a deposit or advance payment to ensure the performance of contracts for services such as accounting, auditing, financial consulting, tax, valuation, surveying, technical design, supervision consulting, and investment project preparation)...

3. The time of issuing invoices for specific cases is as follows:...
   d.1) In cases where ownership or usage rights have not been transferred: If payments are made according to the project progress or the payment schedule in the contract, the time of issuing the invoice is the day the payment is made or as agreed in the payment terms of the contract."

• Clause 13, Article 10, regulations on invoice contents:
  "13. Writing, numbers, and currency displayed on the invoice....
  c) The currency on the invoice is Vietnamese Dong, symbolized as "VND" - In cases where financial transactions occur in foreign currency according to foreign exchange laws, unit prices, total amounts, VAT amounts by tax rate, total VAT, and total payment amounts must be shown in foreign currency, with the foreign currency name written. The seller must also show the exchange rate of the foreign currency to Vietnamese Dong according to the regulations of the Tax Administration Law and its guiding documents."

According to Circular No. 219/2013/TT-BTC dated December 31, 2013 of the Ministry of Finance guiding the implementation of the Value Added Tax Law and Decree No. 209/2013/ND-CP dated December 18, 2013 of the Government detailing and guiding the implementation of certain provisions of the Value Added Tax Law:

• Article 8 stipulates the time of determining VAT:
  "1. For the sale of goods, the time is when ownership or usage rights are transferred to the buyer, regardless of whether payment has been received.

2. For the provision of services, the time is when the service is completed or the invoice for the service is issued, regardless of whether payment has been received.
   For telecommunications services, the time is when the data reconciliation for the telecommunications service charges according to the economic contract between the telecommunications service providers is completed, but no later than 2 months from the month the telecommunications charges arise.

3. For the provision of electricity, water, the time is the reading of the consumption meter on the day it is recorded for invoicing."

• Clause 12, Article 14, the principle of deducting VAT input:
  "12. Businesses can declare and deduct VAT for goods and services purchased under the authorization of organizations or individuals whose names appear on the VAT invoices. This includes situations where founders authorize an organization or individual to pay certain costs related to the establishment of the enterprise, purchase goods, or materials. The enterprise is allowed to deduct VAT input as per VAT invoices issued by the authorized party and must make payments through banks for invoices with a value of 20 million VND or more."

Based on the above regulations and the Company's inquiry, Bac Giang Tax Department answers as follows:

• In the case before the establishment of the enterprise (during the investment stage), since the company has not completed the business registration process, Yadea International Pte.Ltd (referred to as the Investor) signed a preliminary contract for renting infrastructure and land from Lideco 1 Joint Stock Company and has made a deposit according to the schedule in the contract. However, Lideco 1 has not issued an invoice to the Investor. After the company is granted the business registration certificate, the Investor, the Company, and Lideco 1 will sign a tripartite agreement to transfer rights and obligations so the Company can continue performing the signed contracts. After the service provision is completed according to the contract, Lideco 1 will issue the invoice as agreed upon by all parties according to Decree No. 123/2020/ND-CP.

• Regarding the currency and exchange rate on the invoice, the Company should base its actions on Clause 13, Article 10 of Decree No. 123/2020/ND-CP.

Bac Giang Tax Department provides this information for the Company to understand and comply with. Should there be any further questions during the process, the Company may contact the Propaganda and Support Department at Bac Giang Tax Department, phone number 02043857284 for assistance.