WHAT LEGAL CONSEQUENCES CAN A STARTUP FACE WHEN IT FAILS TO OBTAIN INVOICES FOR INPUT EXPENSES?

During the startup stage, in an effort to minimize operating costs or due to frequent transactions with individuals and small-scale businesses, many startups often overlook the importance of obtaining invoices for input expenses. This seemingly minor omission may create a significant financial “blind spot,” placing the enterprise at considerable risk during tax inspections and audits.

Let us examine this issue from a legal, managerial, and practical perspective with insights from M.A. Nguyễn Hữu Long.

1. The Case

Company X is a startup operating in the creative services industry. To reduce operating costs, the founder regularly purchases technology equipment and office supplies from individual online sellers and small retailers that do not issue invoices. In addition, expenses such as fuel costs and business entertainment are paid in cash without supporting documentation or legally valid vouchers.

At the end of the fiscal year, while preparing the Corporate Income Tax (CIT) finalization, the company’s accountant discovered that more than 40% of the operating expenses lacked valid invoices and supporting documents.

Consequently, the company’s accounting profit was significantly overstated, resulting in a Corporate Income Tax liability far exceeding its actual economic profit. Moreover, the company faced the risk that the tax authority would completely disallow these undocumented expenses as deductible expenses for tax purposes.

2. Legal Perspective – A Robust Legal Shield

The failure to obtain invoices and supporting documents for business expenditures constitutes a violation of fundamental accounting and tax principles.

Pursuant to Circular No. 20/2026/TT-BTC, except for expenditures expressly classified as non-deductible, enterprises may deduct all expenses when determining taxable income provided that the following conditions are satisfied:

• The expense is actually incurred in connection with the enterprise’s production or business activities; and
• The expense is supported by lawful invoices and valid supporting documents in accordance with applicable laws.

Furthermore, Clause 1, Article 4 of Decree No. 254/2026/ND-CP provides:

“When selling goods or providing services, the seller must issue an electronic invoice to the purchaser (including cases where goods or services are used for promotions, advertising, samples, gifts, exchanges, salary substitutes for employees, internal consumption, lending, or borrowing), as well as other cases prescribed by the Minister of Finance, except where electronic invoices are not required under Article 7 of this Decree. Electronic invoices must comply with the prescribed standardized data format and contain all mandatory information required by tax legislation, accounting legislation, and Article 10 of this Decree, ensuring that they accurately and truthfully reflect the underlying economic transactions. The seller shall bear legal responsibility for the accuracy of the issued invoice.”

Tax Risks

Where business expenses are unsupported by lawful invoices or valid documentation, such expenses will not qualify as deductible expenses for the purpose of determining taxable Corporate Income.

As a result, the enterprise will be required to pay Corporate Income Tax based on an artificially inflated taxable profit, thereby creating unnecessary tax liabilities and placing substantial pressure on the company’s cash flow.

3. Psychological, Educational, and Corporate Governance Perspective – The Human-Centered Approach

Risk Management Perspective

Neglecting to obtain invoices reflects a short-term management mindset.

A sustainable enterprise must recognize that an invoice is far more than an accounting document—it is legal evidence demonstrating the legitimacy, transparency, and traceability of business expenditures.

Every startup should adopt the following principle:

“For tax purposes, an expense without a valid invoice is treated as an expense that does not legally exist.”

Behavioral and Organizational Perspective

Many founders hesitate to request invoices because they fear inconveniencing suppliers or damaging business relationships.

However, in a professional business environment, requesting an invoice is both the purchaser’s legal entitlement and commercial responsibility.

Educating employees about procurement procedures and requiring proper supporting documentation from the outset enables startups to establish a culture of compliance, accountability, and financial transparency, while minimizing reliance on undocumented or informal transactions.

4. Comprehensive Solutions Recommended by Legal Expert Nguyễn Hữu Long

To safeguard startup capital and ensure financial transparency, M.A. Nguyễn Hữu Long recommends the following three-step approach:

Step 1 – Establish a Standardized Procurement Process

Implement a strict internal policy:

“No Invoice, No Payment.”

Regardless of the amount involved, every expenditure should be reviewed and approved by the accounting department only after lawful invoices and supporting documents have been obtained.

Step 2 – Properly Document Exceptional Transactions

Where purchases from individuals who are unable to issue invoices are unavoidable, enterprises should utilize legally recognized purchase declaration forms (goods and service procurement schedules) where permitted under applicable sector-specific and local regulations to substantiate deductible expenses.

Appropriate contracts, payment records, and bank transfer documents should also be retained to strengthen the evidentiary basis of such expenditures.

Step 3 – Prioritize Reputable Suppliers

Gradually shift procurement activities toward professional suppliers capable of issuing compliant electronic invoices.

This approach not only enables the enterprise to secure valid input invoices for tax purposes but also enhances product and service quality while ensuring access to warranty and after-sales support.

Conclusion

Invoices serve as a company’s first line of defense during tax inspections and audits.

Investing time today to establish a compliant documentation system can save a business hundreds of millions of Vietnamese dong in unnecessary tax liabilities in the future. More importantly, it strengthens financial transparency, enhances regulatory compliance, and lays a solid foundation for sustainable business growth.

Expert Commentary

This article has been prepared based on the professional consultation of M.A. Nguyễn Hữu Long, an expert in Leadership, Law, Psychology, and Education.

Through an interdisciplinary approach, we provide not only robust legal protection but also comprehensive solutions in corporate governance, risk management, and psychological insight, contributing to the sustainable development of businesses and the broader community.

If you or your organization is facing similar legal challenges relating to business operations, land matters, or educational issues, please contact us via our hotline or submit your inquiry through the tuvanphapluattamlygiaoduc.vn website or call (+84) 898 627 762 for timely professional assistance.

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