Vietnamese Firms Shifting to E-Invoices
According to Vietnam’s General Department of Taxation, around 3,000 firms have started to use e-invoice for its transactions, an increase from only 656 firms in 2016. The Ministry of Finance is also drafting a new circular on e-invoice to make it compulsory for enterprises and State-owned firms to use e-invoices from July 1, 2018. E-invoices not only allow firms and tax authorities to save costs and reduce administrative burden but also helps in controlling billing frauds.
Most of the firms shifting towards e-invoices are from Hanoi and Ho Chi Minh City and are mostly involved in the trade and services. The exact number of firms who used e-invoices in 2017 is 2,939, an increase from 30 in 2011, 331 in 2015, and 656 in 2016. A total of 1.6 billion e-invoices were used last year.
Although the number of firms using e-invoices has increased, it is still a small share of the 560,000 businesses. The government hopes that with improving IT infrastructure, a larger number of firms will shift away from paper invoices in 2018.
Advantages of e-invoices
E-invoices not only saves time and cost but also reduces the administrative burden and helps in overcoming billing frauds. As per government estimates, if 2.5 billion invoices are used in a year, firms can save around VND 1 trillion (US$43.9 million).
In addition to reducing the burden and cost for enterprises, e-invoices also help tax authorities in minimizing fraud. Electronic invoices also led to the creation of a database of invoices for tax authorities, which help in reducing cases of fake or multiple invoices.
Although the number of firms using e-invoices has increased, it is still a small share of the total number of businesses in Vietnam. Enterprises will need time to get familiar with the system and enhance their IT infrastructure for a smoother transition to e-invoices.
In addition, limited understanding continues to delay the use of e-invoices by firms and customers. Also, agencies responsible for goods inspection along with customers continue to use paper invoices out of habit, further delaying the use of e-invoices.
The Ministry of Finance is currently drafting a new circular on electronic invoices to make it compulsory for firms and State agencies. As of now, the probable implementation date is July 1, 2018. The draft will also provide clarity about cases in which e-invoices cannot be used and tax authorities will be liable for printing and providing the invoices for enterprises.
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