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These errors do not only stem from carelessness or lack of updated knowledge but can also lead to serious consequences such as disallowed expenses, loss of VAT deduction rights, or even monetary fines. Below are common errors, causes, consequences, and preventive measures for each case, clearly presented so that even non-specialists can understand.
Using illegal or invalid invoices
Sometimes businesses obtain illegal input invoices – for example, invoices bought from “ghost” companies or invoices from sellers that have ceased operations, or invoices lacking full content as required by regulations. The cause may be that the business failed to check the legality of the partner, or worse, intentionally bought invoices to increase input costs.
Cause: Lack of legal understanding or desire to reduce taxes leads businesses to accept invoices from unreliable suppliers. Sometimes accountants don’t check the tax code or the operational status of the seller before accepting the invoice.
Consequence: Illegal invoices will not be accepted during tax finalization; businesses cannot deduct input VAT, and such invoices will not be counted as legitimate expenses when calculating corporate income tax. Additionally, the company may be subject to special monitoring by the tax authority, face tax arrears, and be fined. In severe cases, using fake invoices may be considered fraud or tax evasion with very strict penalties.
Prevention: Always verify the legality of the invoice and the issuer. Businesses should check the supplier’s tax code on the tax authority’s portal to ensure the partner is operational and not classified as high-risk. Only accept invoices for actual transactions with accompanying goods/services. Absolutely do not “buy” fake invoices to reduce tax, as the risk always outweighs the benefit.
Incorrect or missing information on the input invoice
A common accounting error is failing to thoroughly check the information on received input invoices. Common errors include: incorrect company tax code, incorrect or missing company name, address, incorrect date or VAT rate on the invoice… Causes often include the seller issuing the invoice with errors or the buyer not providing full information, and the buyer’s accountant not reviewing the invoice upon receipt.
Cause: The seller may miswrite the information due to carelessness. The buyer’s accountant may be subjective and not compare the invoice to their company’s information (name, address, tax code) immediately upon receipt. Also, if the company changes its information (address, name) without promptly informing the supplier, this can easily lead to invoice discrepancies.
Consequence: If the invoice has incorrect basic information (like name, address, tax code), in principle, the buyer cannot deduct input VAT and cannot count it as a valid expense since the invoice does not meet requirements. In practice, there have been cases where businesses had input VAT deductions disallowed and were fined when the tax authority found errors on the invoices. Additionally, incorrect information requires contacting the seller to correct or reissue the invoice, causing delays and possibly affecting the current tax report.
Prevention: Carefully check every invoice upon receipt. Compare company name, address, tax code, dates, amounts, and VAT rates on the invoice with the contract/purchase order. If errors are found, immediately contact the seller to prepare a minutes and request a corrected or reissued invoice. This should be done as early as possible before declaring taxes for that period to avoid future trouble. Accountants should also proactively inform the seller to update information if the company changes (e.g., moves address).
Missing input invoice declarations (omitted invoices)
Failing to declare one or some input invoices in a period is a very common mistake, especially when there are many invoices. This can occur when invoices arrive late, are temporarily misplaced, or the accountant forgets due to handling too many documents.
Cause: Mainly due to carelessness or poor document management. The accountant may not have received the invoice from the purchasing department or it may have been mixed in with other documents and not entered in the records on time. In small businesses, where systematic tracking is lacking, invoices can easily be overlooked.
Consequence: Omitted input invoices cause the business to lose the right to deduct VAT for that period, leading to financial loss. Additionally, if the tax authority discovers a purchase invoice that the business failed to record, it may be considered as a lost invoice and the business may be fined for violating invoice regulations. In the worst case, omitted input invoices can cause the tax authority to suspect the business of hiding revenue or tax evasion (even if not intentional).
Prevention: Build a strict invoice management process. Every purchase invoice received should be recorded and stored immediately in the accounting department. Use accounting software or Excel to track invoice lists—any purchase/service must have an accompanying invoice, and if not yet received, it must be followed up until it is. At the end of each period, accountants should reconcile invoices with the purchasing department (or based on contracts, receipts) to ensure none are missed. If a missing invoice is discovered after the tax return has been submitted, promptly submit an additional declaration as per regulations (before a tax audit decision is issued) to claim the deduction and minimize risk.
Duplicate or excessive input invoice declarations
Contrary to omission, some accountants declare input invoices more than once—entering an invoice into the books twice or declaring VAT twice. This error often happens due to confusion during data entry, especially when receiving adjusted invoices and declaring both the original and the adjusted invoice as two separate ones, or when multiple people input invoice data.
Cause: Manual data entry without control is the main cause. The accountant may forget that the invoice has already been declared and enter it again (especially with long invoice lists). In cases where both paper and e-invoices exist, duplicates can occur if not careful. Also, when receiving adjusted or replacement invoices, if the accountant doesn’t understand the rules, they may mistakenly declare both old and new invoices.
Consequence: Duplicate declaration leads to inaccurate records and will be discovered by tax authorities through discrepancies between buyer and seller or data reconciliation. The business may be required to adjust, resubmit the tax return, and could be fined for incorrect declaration if not promptly corrected. In cases where excess VAT is refunded or deducted due to duplication, the business must repay the excess and late payment fines. In general, duplicated invoice declarations cause risks and damage the credibility of the business’s tax reports.
Prevention: Set up cross-check mechanisms when entering invoices. Each input invoice has a unique number and symbol—accountants should arrange invoices in numerical order and check for duplicates before declaring. Use invoice management software with duplicate detection. When receiving adjusted/replacement invoices, the original should be marked or excluded from the declaration list. Periodically, the chief accountant should review the declared invoice list to ensure no number is duplicated.
Losing, damaging, or improperly storing input invoices
Losing paper input invoices or improperly storing e-invoices is a serious error. Many small businesses lack proper storage systems and face cases of lost, torn, burnt invoices, or deleted e-invoice files.
Cause: Loose storage is the main cause. The business may lack a secure filing cabinet for paper invoices, leading to loss during transfers, or damage from mold, fire. For e-invoices, if the accountant doesn’t download and store them or fails to back up data, files may be lost when switching systems. Additionally, human errors like dropping or misplacing invoices also contribute.
Consequence: Losing input invoices violates invoice management regulations and results in administrative fines. Depending on severity, fines can range from a few million to tens of millions of dong. The maximum fine can be up to 10 million VND for losing an input invoice. Besides fines, the business loses the right to use that invoice for VAT deduction (since no original document is available). Explaining to tax authorities becomes complex, requiring procedures like requesting a copy from the seller, drafting a report on the lost invoice… Losing invoices causes double damage: fines and lost deductible tax plus the burden of resolution.
Prevention: Establish safe invoice storage procedures. For paper invoices, have dedicated cabinets, organized by month/quarter, and scan copies if possible. Important invoices should be photocopied or scanned for electronic backup in case the original is lost. For e-invoices, accountants must download (XML/PDF files) to the internal system and back up regularly (e.g., external drive or trusted cloud service). Also, train staff to handle documents carefully to avoid misplacement or loss. Any report of lost invoices (if it occurs) must be done promptly following tax authority guidelines to mitigate penalties.
Paying in cash for invoices over 20 million VND
A less document-related but directly relevant error to input invoices is paying in cash for high-value invoices (over 20 million VND). According to tax regulations, in order to deduct input VAT for invoices valued at 20 million VND or more, businesses must pay via non-cash methods (bank transfer or other valid non-cash methods). Many small businesses are unaware of this rule or choose convenience, paying cash to suppliers, resulting in unfortunate consequences.
Cause: Lack of understanding or belief that paying cash is acceptable. Sometimes due to urgent transactions or the supplier’s request, the business complies without considering tax consequences. Additionally, some small business owners are unfamiliar with bank transactions or think splitting cash payments avoids the rule (which is incorrect).
Consequence: If an invoice over 20 million is paid in cash, the business cannot deduct the input VAT or count it as a deductible expense for corporate income tax. In other words, the entire VAT amount on that invoice must be borne by the business, and the cost, although actually spent, may be excluded during tax finalization. This significantly increases the business’s tax burden. Moreover, repeated violations can draw tax authority attention and penalties for not complying with non-cash payment regulations.
Prevention: Always use bank transfer or non-cash payment methods for invoices valued at 20 million VND or more. Accountants must remind leadership and the purchasing department about this rule before paying suppliers. If the partner insists on cash, negotiate to split payments into installments under 20 million with corresponding invoices, or preferably explain the need for bank transfer (since sellers also want their >20 million invoices to be valid). Following this principle protects tax benefits and avoids future issues.
Conclusion
Input invoices are an area prone to errors but can be well-managed if businesses and accountants are careful. Each of the above mistakes can result in financial or legal loss, so prevention is better than correction. Accountants must stay updated with regulations, build tight invoice control processes, and improve accuracy in daily work. With the above notes on causes, consequences, and preventive measures for common input invoice errors, we hope small businesses and accountants can learn from experience to avoid unnecessary mistakes and maintain transparency and efficiency in financial and accounting operations.
