Vietnam’s E-invoices: Decree 123 Delays Implementation Until July 2022

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  • Vietnam issued Decree 123 delaying the implementation of the use of electronic invoices (e-invoices) to July 1, 2022.
  • E-invoices are expected to save businesses time and money, contributing to greater efficiency for both enterprises and tax authorities.
  • While businesses have until July 2022 to transition and comply with the new regulations, they are encouraged to apply early and implement the use of e-invoices for their business.

Vietnam recently issued Decree 123/2020/ND-CP (Decree 123) guiding the implementation of invoices and a postponement in the implementation of electronic invoices (e-invoices) until July 1, 2022. Earlier the deadline, for implementing the use of e-invoices was November 1, 2020.

While the postponement gives some relief, businesses are encouraged to implement e-invoicing before the deadline to mitigate any compliance issues.

As per Decree 123, the current invoicing regulations including Decree 51/2010/ND-CP, Decree 04/2014/ND-CP, and Decree 119/2019/ND-CP will remain effective during the transition period until June 30, 2022, except for some points such as the mandatory implementation of e-invoicing from November 2020.

However, if firms receive a notification from the tax authorities, they will be required to switch to e-invoices as stipulated in the timeframe issued by the tax department.

If firms do not have the necessary infrastructure in place to implement the use of e-invoicing, they can use the current invoices but must submit information relating to invoices in Form 3 as per Decree 123, along with the submission of VAT returns.

In addition, newly established firms that have been instructed by the tax authorities to implement e-invoicing but do not have the infrastructure in place can use invoices as per Decree 51 and Decree 4 but will need to submit Form 3 as per Decree 123.

Guidelines on implementing e-invoicing: Circular 68

Vietnam issued Circular 68/2019/TT-BTC (Circular 68) to provide guidance for Decree 119/2018/ND-CP (Decree 119) on the use of electronic invoices (e-invoices). Decree 119 states that all businesses, excluding household businesses or individuals, must issue an e-invoice with or without the tax verification code to the buyer for the sale of goods and services.

Below, we highlight the steps and procedures investors should undertake to help them become compliant with the new regulations.

Types of e-invoices

There are two types of e-invoices: one with the tax authority’s verification code and one without. E-invoices with the verification codes can be used for tax declarations.

Firms in the electricity, petroleum, telecommunication, credit financing, transportation, e-commerce, insurance, supermarkets, and trading sectors can use e-invoices without tax verification codes.

In addition, enterprises that transact directly with the tax authorities electronically or have the technology infrastructure, accounting software, and e-invoice software as per regulations are not required to use e-invoices with verification codes.

Individuals and companies in the high tax risk category that are involved in the agriculture, forestry, fishery, industry, and construction sectors, employ more than 10 laborers, and have an annual revenue over US$130,000 (VND 3 billion) in the preceding year must use e-invoices with verification codes.

The same goes for individuals and companies that have annual revenue of over US$430,000 (VND 10 billion) in the trade and services sector.

E-invoice registration

Companies need to register before they use e-invoices (with or without tax codes) to get approval from the tax authorities through the General Department of Taxation’s website.

In case a point-of-sale (POS) system is used, the seller needs to register for the use of e-invoices sent by the POS system for online transfer of data with the tax department.

E-invoices must also be written in Vietnamese. While other languages can be included, it cannot replace Vietnamese.

How to rectify errors in e-invoices

For e-invoices that contain errors, there are three conditions for correction:

  • If a mistake is made in the buyer’s name and address, but other information is correct, the seller should inform the buy and send a notice to the tax authorities (the e-invoice will not be required to be re-issued);
  • If the tax code, invoice amount, tax rate, tax amount or description of goods is incorrect, a new e-invoice will need to be issued (the seller and buyers will need to prepare a document specifying the errors and send a notice to the tax authority); and
  • If the tax department finds an error in the e-invoice, it will send a notice to the seller and the seller will need to re-issue the e-invoice in the designated time frame.

Transition period

Businesses that have already self-printed their invoices or have received invoices issued by the tax authorities before October 19, 2020 can use them till the end of June 30, 2022, in accordance with Decree 123.

If a firm’s IT infrastructure is not ready by the deadline, they can apply for an extension and send invoices using a ‘Form 3’ as an attachment as mentioned earlier.

Public organizations, such as medical establishments and schools, that use fee receipts are allowed to continue using the receipts but need to move to electronic receipts or e-invoices according to the roadmap of the Ministry of Finance.

Firms exporting goods are also required to issue e-VAT invoices or e-sales invoices once export procedures are completed.

The e-signature of the buyer is not mandatory on e-invoices. As long as the buyer meets technical conditions for digital signing, the buyer can electronically sign e-invoices if this is agreed between the seller and buyer.

Vietnam continues to go the digital way

The latest development reflects the government’s move to reform tax administration and overhaul the informal economy. E-invoices will not only save time and costs, but will also reduce the administrative burden and help in account reconciliation, minimizing billing frauds, and maintaining transparency.

Altogether the government expects the initiative to save around US$43.9 million (VND 1 trillion) if the projected 2.5 billion invoices are used in a year.

The new regulations ensure that the government’s focus remains on reducing administrative costs and reform tax issues. However, businesses are likely to face some challenges during the transition period and should carefully study the new changes to make appropriate adjustments. Decree 123’s extension can thus be used, allowing for additional time to make the required changes for application.

Note: This article was first published in September 2018 and has been updated to include the latest developments.


About Us

Vietnam Briefing is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in Hanoi and Ho Chi Minh City. Readers may write to vietnam@dezshira.com for more support on doing business in Vietnam.

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