Must make invoices and declare VAT during the tax declaration period when collecting money according to project progress

In real estate business, collecting money according to project progress is a popular form of payment, helping businesses mobilize capital to implement projects. However, the legal issue often raised is: Are businesses required to issue invoices and declare value added tax (VAT) immediately when collecting money according to progress? Recently, the Tax Department issued Official Letter No. 4447/CT-CS in 2025 with specific instructions as follows:

According to Official Dispatch 4447/CT-CS in 2025, the Tax Department responded to the case of Hong Phuc Land Investment Joint Stock Company related to the transfer of housing in the form of capital contribution or business cooperation. The tax authority affirmed:

“In case an enterprise has real estate business activities, infrastructure construction, house construction for sale, transfer and collects money according to project progress or collection progress stated in the contract, it must issue an invoice to the buyer according to regulations, the date of invoice issuance is the date of collection. Based on the amount of money collected, the enterprise shall declare output VAT arising in the period.”

Thus, the obligation to issue invoices and declare taxes arises immediately upon collection of money, not until the handover of assets or completion of the entire project.

1. Obligation to issue invoices and declare VAT when collecting progress payments

Pursuant to the guidance of the Tax Department in Official Dispatch 4447/CT-CS (2025), enterprises engaged in real estate business, infrastructure construction, house construction for sale or transfer and collect money according to project progress or contract progress shall:

• Invoice must be issued to the buyer as prescribed;
• The invoice date is the date of collection;
• Based on the collected amount, the enterprise declares output VAT arising during the period.

This means: each time money is collected (according to contract progress or project progress) is considered a tax liability, forcing the enterprise to issue invoices and declare the corresponding VAT in the declaration period with that money collection date.

For example , if a business collects the first payment in October 2025, it must issue an invoice and declare VAT in the declaration period of October 2025 (or the fourth quarter of 2025 if declaring quarterly). Leaving it to the next period is a violation of the regulations on the time of issuing invoices and the time of declaring taxes.

2. Significance of the regulation – ensuring transparency and tax management

This regulation aims to increase transparency in the collection of money by real estate businesses, avoiding cases of delaying tax obligations by collecting money in advance but not declaring or issuing invoices. Issuing invoices at the time of collection helps tax authorities accurately monitor the cash flow, revenue and tax obligations of businesses in each period, thereby:

• Prevent the act of hiding revenue or declaring the wrong time of tax calculation.
• Ensure the buyer’s rights when there is legal documentation for the amount paid.
• Contribute to transparency in real estate transfer and trading activities.

3. Handling cases where electronic invoices have been created but not declared according to the reduced VAT rate

Legal basis

The Government has issued Decree 174/2025/ND-CP, implementing the VAT reduction policy according to Resolution 204/2025/QH15. Accordingly, the group of goods and services subject to 10% VAT is reduced by 2% to 8%, except for groups of goods and services subject to exclusions according to points a and b, Clause 1, Article 1 of Decree 174/2025/ND-CP.

At the same time, Clause 1, Article 19 of Decree 123/2020/ND-CP, amended by Clause 13, Article 1 of Decree 70/2025/ND-CP, stipulates the handling of erroneous electronic invoices, including cases of incorrect tax rates, as follows:

• If the tax code, amount, tax rate or tax amount is incorrect, or the goods listed are not of the correct specifications or quality, the seller can choose to adjust or replace the incorrectly issued electronic invoice.

Practical handling

From the above regulations, if a business has issued an invoice but has not declared it according to the reduced VAT rate (for example, still keeping it at 10% instead of 8%), this is determined to be a case of incorrect tax rate.

The seller can choose one of the following two options to fix:

1. Replace electronic invoices with incorrect tax rates – that is, create new invoices and replace old invoices with incorrect tax rates;
2. Adjusting an electronic invoice with an incorrect tax rate – create an adjustment invoice, showing the difference in tax rate and tax amount accordingly.

Both options are acceptable under the regulations, depending on the situation and accounting practices of the business.

4. Determine the last day of the VAT declaration period

About tax declaration period

Pursuant to Point a, Clause 1 and Point a, Clause 4, Article 8 of Decree 126/2020/ND-CP, VAT is a type of tax that can be declared monthly, quarterly or upon each occurrence, depending on the scale and conditions of the taxpayer.

Specifically:

• VAT and personal income tax payers default to declare monthly;
• If meeting the conditions in Article 9 of Decree 126/2020/ND-CP, you can choose to declare quarterly;
• For real estate transfer activities, tax declaration can be made each time tax liability arises.

About the deadline for submitting tax returns

According to Article 44 of the Law on Tax Administration 2019, the deadline for submitting tax declarations is determined as follows:

1. Monthly declaration: no later than the 20th of the month following the month in which the tax liability arises;
2. Quarterly declaration: no later than the last day of the first month of the quarter following the quarter in which the tax liability arises;
3. Declaration for each occurrence: no later than the 10th day from the date the tax liability arises.

5. Some practical notes for businesses

• Invoices must be made immediately upon collection, clearly stating the amount received in advance according to progress, and must not state the entire contract value if not fully collected.
• When the project is handed over, the remaining VAT (if any) will be declared additionally according to the actual transfer value.
• If a business uses electronic invoices, it is necessary to ensure that invoices are issued on time as prescribed in Article 9 of Decree 123/2020/ND-CP to avoid errors leading to administrative penalties.

6. Conclusion

Thus, collecting money according to project progress requires enterprises to issue invoices and declare VAT right in the collection period. This regulation reflects the principle of “tax obligations arising at the time of collection”, ensuring strict management of budget revenue and transparency in real estate transactions.

Enterprises need to proactively comply with the correct time of invoicing, tax declaration and timely update of new regulations to avoid the risk of tax administrative violations. Strictly complying with regulations on the time of invoicing and VAT declaration not only helps enterprises avoid legal risks but also ensures transparency and accuracy in accounting and tax work, especially for enterprises operating in the fields of real estate, construction and housing transfer.

Recommendations from LS Law Firm LLC (“LS Law Firm”)

Above are the basic contents of collecting money according to project progress, which must be invoiced and declared VAT immediately during the tax declaration period based on the provisions of law at the time of writing the article. If you need advice on the above issue or are interested in other legal services, please contact LS Law Firm immediately. via Email: lslawfirm2014@gmail.com for timely support.

Note: The above article is for reference only. Any copying or use of the article as personal evidence in any case or matter is considered unauthorized./.

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