As an effort to mitigate tax evasion and reinforce tax administration, the Government issued Decree No. 119/2018/ND-CP ("Decree 119") dated 12 September 2018, effective on 1 November 2018 to regulate the use of einvoices, as a replacement for paper invoices, by business entities in Vietnam.
Under Decree 119, companies must use e-invoices for selling goods or rendering services as the proof of transaction/payment. Though e-invoices can be converted to paper invoices, the "converted" paper invoices only hold the value of bookkeeping under accounting law, except for paper invoices created by billing machines which are electronically connected with the tax authorities for data transfer.
The issuance of e-invoices is a compulsory requirement. However, this requirement will only be fully applied after a two year transition starting from the effective date of Decree 119. Particularly, the current decree on paper invoices, Decree No. 51/2010/ND-CP ("Decree 51"), will not be superseded until 1 November 2020. This means that Decree 119 on e-invoices and Decree 51 covering paper invoices will co-exist from 1 November 2018 to 31 October 2020. During the transition period, companies are encouraged to transfer their invoice systems from paper invoices to e-invoices. Paper invoices can be used in this transition period in limited cases (e.g., paper invoices that have been legally printed and fully authorized before 1 November 2018). Tax authorities will notify companies to switch to the einvoice system during the transition period.
The content of e-invoices are mostly similar to that of paper invoices, except for certain items specifically associated with e-invoices, such as e-signatures. A noteworthy issue is that buyers also need e-signatures to sign e-invoices. However, in certain special cases where it is not feasible, exceptions may be permitted for the requirement of buyers' signatures in e-invoices in certain circumstances.
Similar to paper invoices, e-invoices also consist of value added tax invoices, sales invoices, and other electronic types of invoices such as e-stamps and e-tickets. Under Decree 119, e-invoices are issued under two main forms, i.e., e-invoices with the tax authority's code and e-invoices without. Most business entities are required to use e-invoices with the tax authority's code. Only certain businesses, such as in the sectors of public utility services, telecommunications, transportation, etc., may use e-invoices without tax authority's code if they have the proper IT infrastructure.