All Vietnamese businesses must transition to e-invoicing this year as the grace period for printed invoices comes to an end. The government has released a plan that includes two main processes and the official format for mandatory e-invoicing in Vietnam.
The Vietnamese government has issued a decree and a circular detailing an elaborate roadmap for the implementation of mandatory e-invoicing from November 2020. All businesses must be prepared to submit e-invoices for clearance with the General Department of Taxation (GDT) before they will be considered valid for tax purposes. The new system aims to both encourage business growth through digitalisation and crack down on invoice fraud in the country.
All businesses must transition to e-invoices by 1 November 2020
Businesses in Vietnam have been able to access and use electronic invoices since 2011. Mandatory e-invoicing has been in place throughout the country since 12 September 2018, with the issue of Decree No. 119/2018/ND-CP. The regulation requires a complete transition to e-invoices by all businesses by 1 November 2020. Some entities are even required to obtain and attach tax codes from the GDT to the invoices.
Businesses with remaining printed invoices—either purchased directly from the tax office or printed internally or externally—were given a grace period to use their remaining paper invoices. Following Decree No. 51/2010/ND-CP and Decree No. 04/2014/ND-CP, the grace period ends 31 October 2020 when all businesses must switch to e-invoicing.
Two e-invoicing processes
There are two types e-invoicing processes: one using e-invoices with tax verification codes and one without tax verification codes. Various factors determine which process businesses must adhere to:
1. E-invoices with verification codes
E-invoices with tax verification codes are eligible for tax declarations and will be mandatory for:
- Self-employed individuals;
- Businesses operating in agriculture, forestry, fishery and construction with an annual turnover greater than VND 3 billion (EUR 116 000), and with more than 10 employees;
- Individuals and companies in the trade and service industry with an annual revenue of at least VND 10 billion (EUR 380 000);
“High tax risk enterprises” must submit e-invoices with verification codes for 12 consecutive months, after which the business will be reassessed. A high tax risk enterprise is defined as having equity of less than VND 15 billion and meeting a condition, for example:
- The registered business address has changed twice or more within a 12-month period without the business making a prescribed declaration or failing to declare and pay tax at the new registration place according to regulations;
- Enterprises which have been penalised for breaches in invoice rules in the last year
2. E-invoices without verification codes
Industries not listed above can issue e-invoices without verification codes that are not eligible for tax declarations. The e-invoice data elements must still be sent to tax authorities, either directly or through an authorised e-invoicing service provider.
Official e-invoice format
Businesses should use e-invoice XML format, consisting of two components: the component containing e-invoice business data and the component containing mandatory digital signature data. For e-invoices with tax authority codes, there are additional components containing data related to tax agency data.
Early adoption of e-invoicing
Businesses can begin to prepare by adopting e-invoicing before the deadline hits. Beyond simply meeting regulations, e-invoicing also lowers transportation costs, reduces administration expenses, minimises fraud risk, increases transparency and allows for seamless scalability.
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