Based on Decree 119/2018/ND-CP issued by the Government on September 12, 2018, the issuance of electronic invoices for the sale of goods and services is mandatory for businesses, replacing paper invoices used previously. This regulation came into effect on November 1, 2020.
In general, the content recorded on electronic invoices does not change much compared to paper invoices. Additional elements on electronic invoices include the digital signature or electronic signature of the seller; the digital signature or electronic signature of the buyer (if any); the tax authority code for electronic invoices with a tax authority code, etc.
The following are regulations that businesses should be aware of.
Types of electronic invoices
The types of electronic invoices are specifically regulated in Article 5 of Decree 119/2018/ND-CP. According to the law, electronic invoices must conform to the standard data format prescribed by the Ministry of Finance, including the following types:
Value Added Tax (VAT) invoiceThis invoice applies to sellers of goods and services who declare value-added tax (VAT) using the deduction method. In this case, VAT invoices include those generated from cash registers with electronic data transfer connections to the tax authorities.
Sales invoiceThis invoice applies to sellers of goods and services who declare value-added tax using the direct method. In this case, the sales invoice includes invoices generated from cash registers with electronic data transfer connections to the tax authorities.
Other types of invoices: Electronic stamps, electronic tickets, electronic cards, electronic receipts, electronic delivery and transportation slips, or other electronic documents with different names but containing the content stipulated in Article 6 of this Decree.
When can businesses issue electronic invoices?
Based on Article 7 regarding the timing of issuing electronic invoices, businesses must issue electronic invoices at the following times:
- For the sale of goods: the time when ownership or the right to use the goods is transferred to the buyer (regardless of whether payment has been received or not).
- Regarding service provision: the time when the service is completed or the time when the invoice for the service is issued (regardless of whether payment has been received or not).
- For multiple deliveries (or delivery of individual items or service stages)Invoices must be issued for the quantity and value of goods and services delivered for each delivery or handover.
What points should businesses keep in mind when converting electronic invoices into paper documents?
Article 10 of the Decree stipulates several important points regarding the conversion of electronic invoices into paper documents as follows:
- The process of converting electronic invoices into paper documents must be... ensure the correct fit The difference between the content of the electronic invoice and the paper document after conversion.
- When an electronic invoice is converted into a paper document, Paper documents are only valid for record-keeping purposes.In accordance with accounting laws and electronic transaction laws, invoices are not valid for transactions or payments, except when the invoice is generated from a cash register with an electronic data transfer connection to the tax authority as stipulated in this Decree.
Which businesses are required to issue electronic invoices starting from November 1st, 2020?
The mandatory issuance of electronic invoices depends on the type of business, business sector, circumstances arising within the business, etc., as detailed in Article 12 of this Decree:
- Businesses operating in the following sectors: electricity; petroleum; postal and telecommunications services; air, road, rail, sea, and inland waterway transport; clean water; finance and credit; insurance; healthcare; e-commerce; supermarket business; trade; and other businesses and economic organizations that have or will conduct transactions with tax authorities electronically, have built information technology infrastructure, and possess accounting software and electronic invoicing software systems that meet the requirements for creating, searching, and storing electronic invoice data as prescribed, and ensure the transmission of electronic invoice data to buyers and tax authorities, are allowed to use electronic invoices without a tax authority code (except for cases mentioned in Clause 3 of this Article and cases where registration for the use of electronic invoices with a tax authority code is required) when selling goods or providing services, regardless of the value of each sale or service.
- Households and individual businesses that maintain accounting records, regularly employ 10 or more workers, and have revenue of 03 billion VND or more in the preceding year in the fields of agriculture, forestry, fisheries, industry, and construction, or revenue of 10 billion VND or more in the preceding year in the fields of trade and services, must use electronic invoices with tax authority codes when selling goods or providing services, regardless of the value of each sale or service. Households and individual businesses that are not subject to this mandatory requirement but maintain accounting records and request it may also use electronic invoices with tax authority codes as prescribed.
- Households and individual businesses in the fields of restaurants, hotels, retail of pharmaceuticals, retail of consumer goods, and providing services directly to consumers in certain areas with favorable conditions will pilot the use of electronic invoices with tax authority codes generated from cash registers with electronic data transfer connections to the tax authority starting from 2018.
- Households and individual businesses that do not meet the conditions for using electronic invoices with tax authority codes as stipulated in Clause 4 of this Article, but need invoices to provide to customers, or businesses, economic organizations, and other organizations approved by the tax authority to issue electronic invoices to customers, may be issued electronic invoices with tax authority codes by the tax authority on a transaction-by-transaction basis and must declare and pay taxes before the tax authority issues the electronic invoice for each transaction.
- Businesses, economic organizations, and other organizations must use electronic invoices with tax authority codes when selling goods or providing services, regardless of the value of each sale or service.
Businesses, economic organizations, and other organizations classified as high-risk for tax purposes must use electronic invoices with tax authority codes when selling goods or providing services, regardless of the value of each sale or service.
Deadline for implementing electronic invoices
- For newly established businesses (from November 1, 2018 to October 31, 2020): the tax authorities will notify the business to implement electronic invoices as prescribed.
- Businesses, economic organizations, households, and individual business owners who have been notified to issue printed invoices, self-printed invoices, or have purchased invoices from the tax authorities may continue to use them until October 31, 2020, before switching to mandatory electronic invoices (from November 1, 2018, to October 31, 2020).
- Before using electronic invoices with tax authority codes, businesses, economic organizations, other organizations, households, and individual business owners must cancel any remaining unused paper invoices (Clause 3, Article 14).
How to handle errors in electronic invoices?
- If an electronic invoice with a tax authority code has been issued but not yet sent to the buyer, and an error is discovered, the seller must immediately notify the tax authority to cancel the issued invoice and issue a new replacement invoice.
- If an electronic invoice with a code has been sent to the buyer and an error is discovered later, the seller and buyer must draw up a written agreement clearly stating the error; the seller must notify the tax authorities to cancel the issued invoice and issue a new replacement invoice in accordance with Article 17 of this Decree.
