Vietnam Tax Seminar: Clarifying Deductions and Invoicing for Sole Proprietorships

In a recent seminar co-hosted by Tuổi Trẻ newspaper, the General Department of Taxation, and the Ho Chi Minh City Tax Department, tax experts and officials addressed critical concerns for sole proprietorships regarding tax compliance and financial transparency. The event, titled "Sole Proprietorships: Transparent Cash Flow, Expanding Business Opportunities," aimed to guide businesses through the complexities of tax regulations, particularly in light of evolving economic landscapes.

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Sole proprietors can choose the direct tax calculation method or calculate tax on income minus costs multiplied by the tax rate of 15%. To have time to prepare, they should choose to calculate tax based on revenue ratio.

A significant point of discussion revolved around the deductibility of initial investment costs incurred without proper invoices. Business owners raised questions about whether expenses like medicine cabinets and signage, supported by contracts and acceptance minutes, could be considered reasonable costs. Furthermore, the seminar tackled the issue of utility bills and other expenses where the billing address might not precisely match the business license, but payments were made online. Tax officials clarified that while proper documentation and cashless transactions are crucial for cost deductions, there are provisions for addressing certain discrepancies.

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According to current regulations, sole proprietors with revenue from 1 billion VND/year or more are required to register for e-invoices with the tax authorities. From the time of registration, sole proprietors are responsible for issuing invoices for all sales and service provision activities.

Experts emphasized the importance of choosing the appropriate tax calculation method, whether direct or based on revenue minus costs. They advised businesses to proactively prepare necessary documentation and clearly delineate revenue streams to mitigate risks during tax settlements. The seminar also touched upon the issuance of electronic invoices, a mandatory requirement for businesses with annual revenues exceeding 1 billion VND. For transactions that occurred before registration but for which invoices were not yet issued, businesses can still issue adjusted invoices if requested by the buyer. This proactive approach to tax management is vital for sole proprietorships aiming for sustainable growth and compliance in Vietnam's dynamic market.

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For transactions that occurred before the registration date but for which invoices were not issued, if the buyer requests, the sole proprietor can still issue an adjusted invoice for that transaction.