On 19 October 2020, the Vietnamese government issued Decree 123/2020/ND-CP, deferring the 1 November 2020 deadline for mandatory e-invoicing and annulling certain articles of the previously announced Decree 119/2018. The new entry into force date for mandatory “clearance type” e-invoicing in Vietnam is 1 July 2022.
Companies may continue to use any pre-printed, self-printed or electronic invoices that they purchased from the GDT (General Department of Taxation) before 19 October 2020. These invoices, with or without the GDT authentication code, will remain valid until 30 June 2022.
Exceptions to the new timeline
The following scenarios require businesses to implement e-invoicing before the official deadline of 1 July 2022:
- Businesses established between 19 October 2020 and 30 June 2022, if they have received a notice from the GDT;
- If an established business has run out of GDT allocated paper invoices, the GDT may decide to require the business to switch to e-invoicing. Businesses without technological capabilities to do so may be awarded pre-printed invoices under the condition that it sends invoice data and VAT return submission to the tax authority using Form No. 03 / DL-HDĐT, published in the appendix of Decree 123/2020.
Two e-invoicing processes remain the same
The two types of e-invoicing processes have not been altered in the new decree: one using e-invoices with GDT tax verification codes and one without. Various factors determine which process businesses must adhere to:1. E-invoices with GDT verification codesE-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 GDT verification codesIndustries 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.
GDT XML e-invoice format and eSignature
There are also no changes in the required e-invoice format. Businesses should use the GDT XML format, consisting of two components: the component containing e-invoice business data and the component containing mandatory electronic signature data. For e-invoices with tax authority codes, there are additional components containing data related to tax agency data.
Advantages of e-invoice adoption
The government is generally encouraging businesses to switch to e-invoicing before the 1 July 2022 timeline. Several incentives have been created, including relieving businesses from reporting data separately on invoices issued under the new standards.