The implementation of electronic invoices (E-invoices) that the Ministry of Finance and the Tax sector are currently executing has contributed to the digital transformation in Vietnam. It has positively impacted the operational methods, leadership, management, and work processes of tax authorities as well as businesses. So, what should businesses take note of when it comes to tax invoices and electronic invoices? This blog will provide businesses with the latest updates on this matter.
1. Tax invoices
Currently, businesses in Vietnam have the option to use pre-printed invoices, self-printed invoices, or electronic invoices. Invoices must contain all the required information as per regulations and must be registered or reported to the local tax authorities. Commercial invoices are used for exported goods.
2. Electronic invoices
The government officially issued Decree 119 on electronic invoices in September 2018. This decree came into effect on November 1, 2018. Circular 68/2019/TT-BTC, which provides guidance on implementing Decree 119, was issued in October 2019 (Circular 68) and officially became effective on November 14, 2019. Decree 119 and Circular 68 mandated that companies must use electronic invoices starting from November 1, 2020.
However, on October 19, 2020, the government issued Decree 123/2020 (Decree 123), which extended the mandatory implementation of electronic invoices from November 1, 2020, to July 1, 2022.
Nevertheless, Decree 123 encourages taxpayers to meet the requirements for electronic invoices and electronic documents infrastructure earlier than the extended deadline.
3. Electronic invoices with verification codes
“Companies that are deemed to have a high tax risk" are required to use electronic invoices with continuous verification codes for a period of 12 months. Companies falling under the category of high tax risk are defined as those with owner's equity capital of less than 15 billion Vietnamese Dong and exhibit certain specific criteria, such as:
Selling goods and providing services to related parties (as defined).
Failing to comply with tax declaration requirements as prescribed.
Changing their business location more than 2 times within 12 months without reporting as required or failing to declare and pay taxes at the new registered location.
Companies that have been fined for violations of invoice regulations in the previous year.
Companies classified as "high tax risk" will be re-evaluated after 12 months to determine whether thay can use electronic invoices without the need for verification codes.
4. Electronic invoices without tax authority verification codes
The sectors or industries in which companies are allowed to use electronic invoices without tax authority verification codes will be determined based on the economic sectors as prescribed. This includes sectors such as electricity, petroleum, postal and telecommunications services, transportation, financial and credit services, insurance, e-commerce, supermarket businesses, and others, or companies that meet specific criteria.
Companies using electronic invoices without tax authority verification codes must transmit electronic invoice data to the tax authority directly or through an authorized electronic invoice service provider. If a company transmits data directly through the tax authority's electronic portal, certain technical requirements for accessing the portal must be met.
Before using electronic invoices (with or without tax authority codes), companies must register and obtain approval from the tax authority through the electronic portal of the General Department of Taxation.
5. Electronic invoices' implementation time
The deadline for mandatory use of electronic invoices has been extended until July 1, 2022. During the transitional period until June 30, 2022, the existing regulations on invoices (specifically Decree 51/2010, Decree 04/2014 amending Decree 51/2010, and Decree 119/2018) will continue to apply, and companies can continue to issue invoices until they receive notification from the tax authority.
Additionally, businesses should also be aware of important changes related to taxes and invoices in 2021, which can be found here.
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