VAT Reduction Invoicing: How to Correctly Issue Invoices and Declare Revenue?

The Legal Question:

According to Point b, Clause 3, Article 1 of the Government's Decree No. 174/2025/ND-CP dated June 30, 2025, for business establishments paying VAT under the direct method, when issuing sales invoices for goods and services eligible for VAT reduction:

• The "Amount" (Thành tiền) column must fully state the value of the goods and services before the reduction;

• The "Total Amount for Goods and Services" (Cộng tiền hàng hóa, dịch vụ) row must state the amount calculated based on the 20% reduction in the percentage rate on revenue;

• Concurrently, a note must be included regarding the tax reduction content pursuant to Resolution No. 204/2025/QH15.

In case an enterprise signs a contract with an investor, and the contract or contract appendix explicitly states that the contract value is the price already reduced in accordance with Resolution No. 204/2025/QH15, when issuing the invoice, is the enterprise permitted to directly write the reduced value in the "Amount" column and omit the tax reduction note guided by Decree No. 174/2025/ND-CP?

Concurrently, in this case, which value shall the enterprise use to declare revenue for tax calculation purposes: the post-reduction value according to the signed contract, or must they back-calculate to the pre-reduction value to declare revenue according to the regulations?

Official Response

Tax Office No. 1 of Son La Province responds to this matter as follows:

Pursuant to Point b, Clause 2; Point b, Clause 3; and Clause 4, Article 1 of the Government's Decree No. 174/2025/ND-CP dated June 30, 2025, providing regulations on the VAT reduction policy under Resolution No. 204/2025/QH15 dated June 17, 2025, of the National Assembly:

"Article 1. Value-Added Tax Reduction

2. VAT Reduction Rates: ... b) Business establishments (including business households and individual businesses) that calculate value-added tax under the percentage-on-revenue method shall be granted a 20% reduction in the percentage rate used to calculate value-added tax when issuing invoices for goods and services eligible for value-added tax reduction as prescribed in Clause 1 of this Article.

3. Order and Procedures for Implementation: ... b) For the business establishments specified in Point b, Clause 2 of this Article, when issuing sales invoices for the provision of goods and services eligible for value-added tax reduction, the "Amount" column must fully state the payment for goods and services before the reduction; the "Total Amount for Goods and Services" row must state the amount calculated based on the 20% reduction in the percentage rate on revenue; and concurrently, a note must be explicitly added: "reduced by... [amount] corresponding to a 20% reduction in the percentage rate used to calculate value-added tax under Resolution No. 204/2025/QH15."

4. In case a business establishment specified in Point b, Clause 2 of this Article sells goods or provides services, the sales invoice must clearly state the reduced amount as prescribed in Clause 3 of this Article..."

Based on the aforementioned regulations, for business establishments calculating tax under the direct method (calculating VAT using the percentage-on-revenue method), when selling goods or providing services, the sales invoice must clearly state the reduced amount in strict compliance with the regulations.

There is no exception allowing the direct recording of the post-reduction price in the "Amount" column based on private contract agreements, nor is the omission of the mandatory legal note permitted. Revenue declaration for tax purposes must strictly adhere to the figures properly presented on the legally compliant invoice.

Tax Office No. 1 of Son La Province hereby responds for the taxpayer's awareness and implementation.

Source: chinhsachonline.chinphu.vn