Issuing "fake" Invoices

[Zen]

Hi there,

My company distributes sports equipment to sports shops in Thailand. We have one particular customer (a sports shop) who insist that when we issue the invoice and Delivery Order to him, we are NOT allowed to write his company's full name and address. He insisted that in the "Bill To" section of the invoice, we are only allowed to write ABC - nothing else. Not even a brief address.

I heard that this is not allowed in Thailand. I heard that all invoices must have a company name and address in the "Bill To" section. Or at least ABC with a brief address, or a person's personal name with a brief address.

My company has 2 kinds of invoices, one is for wholesale, in which we print invoices using Quickbooks, and another is for "retail", which are actually pre-printed invoices (Tax Invoice/Receipt) for people who come into our shop, pays cash and carry the products away with them.

This will not be a problem if the customers pays cash, because I can always treat him as a "Cash and Carry" retail customer and use the pre-printed TaxInvoice/Receipt in which in the "Bill To" Column, i only need to write "Cash". But the problem is that this customer pays with 60 days credit.

Why is this customer doing this? What can I do? I don't want to lose this customer.

Hope the experts here can help me out pleaseeee...

[Deke]

One reason could be that he sells the invoices to someone else who needs the VAT credit.

[Zen]

So if anything goes wrong, my company will be in trouble?

[Cyberstar]

So if anything goes wrong, my company will be in trouble?

Let's say the invoices are used as Deke suggests? If RD crosschecks any of the three parties involved - two things (at least) might be discovered, requiring explanation:

1) You've booked input VAT from your customer - but he hasn't booked output VAT.

2) The third partee has booked output VAT paid to you, but you haven't booked the input VAT - and most important - you haven't paid that money.

Edited November 23, 2006 by Cyberstar

[Zen]

My God, that's scary.

So, what's the best way for me?

What if I send him a "Proforma Invoice" or a "Fake Invoice" when I deliver the goods, so that my inventory are not yet deducted from the computer system. When he makes payment, then I'll treat him as a retail "Cash and Carry" customer and issue him a "Tax Invoice/Receipt" with the name "CASH".

I know this is risky for me because he can turn around and say that he never received these goods and therefore don't make payment.

What else can I do, please advice....

[monty]

Everything he buys officially in the company name goes into the stock (inventory) of his shop.

At anytime the revenue department can come do a check on his stock. Every item he bought, but is not in stock is considered sold, and has to show up in his books as such, with vat paid and the remaining profit has to show in his company accounts.

Actually in my case it happened a bit different. I bought large quantities of goods, but stocked them. Revenue department then showed up to check why I was buying large quantities of products, but I was not showing any sales (or much less) in my books. Obviously this was cleared pretty quick as I actually didn't sell and had every item still in stock...

In short, the bloke wants to sell stuff without having to pay VAT and without declaring profit on the sales

Edited November 23, 2006 by monty

[george]

Cheating the VAT system is very serious, you get get jail for that. Better you talk to your accountant asap.

[Zen]

It's strange to me because this particular customer pays me for the VAT that i charge him...just that he doesn't want to claim the VAT at his end.

So, if I do issue him the "fake invoice" but don't deduct the inventory until he pays up and when I issue him the Tax Invoice/Receipt, and if the Tax Department comes to check, can I just say those invenotry have been placed at my customer's shop "On Consignment"?

[Zen]

I have no intention to cheat the VAT system...just that this customer insisted on doing the invoices according to his instructions and I heard that it's not allowed here, so I stopped doing business with him.

But I'd like to know if there's any other way to start dealing with him again.

[george]

When you issue a VAT receipt you MUST put the correct customer name and address on the invoice.

An exception is petty sales in a cash register, see for example an "abbreviated" VAT receipt from MacDonalds, Burger King etc - it says "Abb. VAT invoice". No need for address there.

Why you don't ask your accountant, and let us know the outcome.

[Zen]

When you issue a VAT receipt you MUST put the correct customer name and address on the invoice.

An exception is petty sales in a cash register, see for example an "abbreviated" VAT receipt from MacDonalds, Burger King etc - it says "Abb. VAT invoice". No need for address there.

Why you don't ask your accountant, and let us know the outcome.

Yup, that's what I meant "Cash and Carry" retail sales...I can give him the "Abb VAT invoice" if he pays me cash on delivery. But he only pays me 60 days after he receives the goods.

So, I was wondering if I give him the "fake invoice" (and don't deduct my inventory yet) and then issue a "Abb VAT invoice" 60 days later when he makes payment (and i'll deduct inventory based on this Abb Vat Invoice), will there still be a problem with the tax department.

My accountant's advice is to issue the real invoice with the real name and real address at the point of delivery. Of course this customer doesn't accept this and we stopped dealing because of this.

Hence I'm seeking advice from people here....

Thanks a lot.

[george]

You should follow the sound advise of your accountant, IMHO.

[Zen]

Sigh..that means no more chance of recovering this customer..

[Chang_paarp]

Sigh..that means no more chance of recovering this customer..

And the chance to keep doing business for a long time.

[Zen]

I heard that many thai companies do play this kind of "fake invoices" game...some thais even told me it's common...

[Chang_paarp]

I heard that many thai companies do play this kind of "fake invoices" game...some thais even told me it's common...

You're farang?

Follow the letter of the law, you don't get the cultural exceptions.

[Pilchard]

Set up an account in your wholesale accounting system called "Non Account Customer" address as "Customer collect". This will then issue VAT receipts at the correct wholesale price rather than retail, reduce your stock level correctly and let you give the customer 60days credit.

Check it with your accountant first

hope this helps

[griffer]

does he still want to buy from you?

if so, i would have thought a bit of compromise was necessary...

he wants, in effect, to become a "cash customer" of yours

therefore he loses the ability of 60 days credit by having an anonymous receipt.

you sell the goods, he gets the paperwork titled the way he likes.

[Pilchard]

It's strange to me because this particular customer pays me for the VAT that i charge him...just that he doesn't want to claim the VAT at his end.

So, if I do issue him the "fake invoice" but don't deduct the inventory until he pays up and when I issue him the Tax Invoice/Receipt, and if the Tax Department comes to check, can I just say those invenotry have been placed at my customer's shop "On Consignment"?

I think the reason he doesn't want his name and address on the invoices is so he can not be traced through you as doging his taxes if the revenue department look through your account list.

"Consignment" is not allowed in Thailand as far as I know, everything that leeves your shop has to be invoiced out or they will accuse you of selling off the books.

Thai's are allowed to be sole traders, he does not need a Co.Ltd to trade.

If he is registered as Mr whatsisname of whatever address on your system you should be fine.

It would not be your fualt if a customer gave you wrong name and address !

Does QBooks doe delivery notes ? No need to bill until he pays if it does.

[cclub75]

Cheating the VAT system is very serious, you get get jail for that. Better you talk to your accountant asap.

Ah, ah, ah, that's a good one Georges.

This behaviour is epidemic, for small businesses.

As for the initial question, well, it's amazing how foreigners can be naive, especially people doing business in Thailand...

"My customer ask me for a special commission in cash or a gift for the wedding of his daugther, but she gets married every month, I don't understand, what's for ?"

"My customer ask me not to issue proper invoice, how come ?"

Wake up guys.

The name of the game is : tricks, cheats, double games, undertables, you name it. From the bottom to the top, small or big businesses.

[Bottlerocket]

Why don't you just call the Revenue Department and ask them what to do about it? I'm sure they'd like to know. But I would personally take the advice of the previous poster recommending you follow the letter of the law. You're in no position to play this sort of game. Why would you risk being fined, closed down, sent to jail, or all three for this one customer? Have some conviction and run an honest business.

[backflip]

"What if I send him a 'Proforma Invoice' or a 'Fake Invoice'"

I suggest that you take Latin lessons: "pro forma" does not mean "fake".

[Deke]

Why don't you just call the Revenue Department and ask them what to do about it?

In my opinion, this would not be a good idea - calling attention to yourself with the Revenue Department.

[Dakhar]

Yep, you don't have cultural rights. The same was probably true in your home country...

[Martin_F]

Outside the legal ramifications of issuing false or fake documents (remeber that you (and I) are still guests here and have protect and safeguard our stay here) you would have no legal standing if the person refuses to pay in the future. You allowed this to go on and you could be taken to the cleaners.

Also the RD has this prize system where people can send in incorrect invoices and they will be entered into monthly draws (this also goes for abbr. invoices).

Follow the recommendations given above. Comply with the law.