There are various regulations governing the usage of invoice such as Decree 51/2010/ND-CP and Decree 04/2014/ND-CP on sale and service invoices and Decree 119/2018/ND-CP on e-invoices. In order to consolidate regulations on invoice usage and settle the differences among these regulations, the Government has issued Decree 123/2020/ND-CP dated 19 October 2020 on invoices and documents (“Decree 123”). Decree 123 will take effect from 1 July 2022. In this update, we set out the main points of the Decree.

Guidelines on e-invoice

E-invoices include e-invoices with and without verification code of the tax authorities. Under the current regulations, businesses in some sectors such as electricity, petroleum, telecommunication, transportation, e-commerce, insurance, supermarkets and trading and businesses satisfying certain conditions can use e-invoices without tax verification codes, except for businesses with high tax risks.

Decree 123, on the other hand, provides that businesses with prior-approval of the tax authorities can use e-invoices without tax verification codes. Further guidance from the tax authorities on details of the conditions to grant such approval is expected to follow.

Decree 123 also sets out that e-invoice service can be obtained from a service provider or the tax authorities while paper invoice must be bought from the tax authority.

Transition period

Currently, businesses have to implement the use of e-invoices from 01 November 2020. However, Decree 123 has delayed the application of e-invoices until 01 July 2022. During this transition period, Decree 51/2010/ND-CP and Decree 04/2014/ND-CP will remain effective.

It is worth noting that even though businesses have until 3 June 2022 to prepare the necessary infrastructure to implement e-invoicing, they are required to switch to the electronic format as soon as they receive such request from the tax authority.

If they do not have the necessary infrastructure to implement e-invoicing, they can still use the current paper invoices but must submit information relating to invoices together with report on VAT returns to the tax authority.

Exemption from e-invoice services charge

Businesses have to pay certain fee in order to use e-invoice. However, the following businesses are exempted from such fee for a period of 12 months from the starting date of e-invoicing:

(a) Small and medium-sized enterprises, which are prescribed under the Law on provision of assistance for small and medium-sized enterprises and its guiding documents;

(b) Cooperatives; households and individuals doing business in geographical areas with difficult socio-economic conditions or areas with extremely difficult socio-economic conditions.

The list of such areas is provided in Decree No. 118/2015/ND-CP dated 12 November 2015 detailing and guiding the implementation of a number of articles of the Law on Investment and its amended, supplemented or replaced documents, if any;

(c) Other small and medium-sized enterprises may also be qualified (i) at the request of the People's Committees of provinces and central cities and (ii) by review of the Ministry of Finance, except for enterprises in economic zones, industrial parks or hi-tech parks.

Prohibited acts

Decree 123 prohibits businesses as well as entities or individuals with related rights and obligations from:

(a) Committing fraudulent acts such as using illegal invoices or using invoices illegally;

(b) Obstructing tax officials from performing their official duties, specifically acts causing damage to the health and dignity of tax officials while inspecting and examining invoices and documents;

(c) Illegally accessing, falsifying or destroying the information system of invoices and documents;

(d) Bribing or committing other acts related to invoices and documents for illegal purposes.

Decree 123 doesn’t define entities or individuals with related rights and obligations.

Details of the time issuing invoices:

Decree 123 details the time of issuing an invoice in specific cases, such as:

(a) In case of providing a large number of services, arising regularly and taking time to check data between enterprises;

(b) In case of real estate, construction of infrastructure;

(c) In case of selling electricity by manufacturing companies;

(d) In the case of providing air transport services and insurance services through agents;

(e) In the case of providing banking services, securities and tourism.

Overall, the new Decree provides for a more comprehensive legal framework for invoices. Please contact us if you need further assistance on this matter.

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This briefing is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For legal advice, please contact our Partners.