In an effort to create an attractive business environment for foreign investors and reduce the complexity of Vietnam’s policy of digitalization, the Vietnamese government took a huge step towards becoming one of the most prominent and emerging global business hubs. One of these policies is by making some accounting features digitalized for ease of processing taxes.
Recently, the government issued Decree 119 (Decree No.119/2018/ND-CP) on the use of e-invoices in Vietnam (electronic invoices) for the sale of goods and the provision of services which enters into force from November 1, 2018.
With Decree No.119 is effective, enterprises, economic organizations, households or individuals companies were granted a two-year long transition period—until October 31, 2020—after which e-invoicing must be used.
Based on Decree No. 51/2010/ND-CP and the Decree No. 04/2014/ND-CP businesses that have already purchased printed invoices directly from the tax department or printed their invoices internally or externally can still use them.
However, every entity and individual in Vietnam is obliged to adopt the online invoicing system until November 1, 2020. This policy is currently in place.
Types of E-Invoices in Vietnam
The purpose of the new system is to crack down the invoice fraud and encourage enterprises to participate in the nation’s effort to become more digitalised.
The government categorized e-invoices into two types:
- e-invoice with a tax verification code (eligible for tax declarations)
- e-invoice without a tax verification code
E-Invoices without a Tax Code
Companies that can use e-invoice without a tax verification code include those in industries such as:
- credit financing
- petroleum, e-commerce
On top of that, businesses which have electronic transactions directly with the government or those which are equipped with the accounting software, accounting and e-invoice software complying to regulations set out by the authorities, are exempted from using e-invoices with verification codes.
E-Invoices with a Tax Code
From 2020 onwards, the use of electronic invoices tax verification codes will be extended as a requirement for self-employed individuals and companies with annual turnover of at least VND 3 billion (US$103,400), and more than 10 employees. Sectors that are included in this new rule are agriculture, forestry, fishery, and construction.
Besides, individuals and companies in trade and service industry with revenue of at least VND 10 billion (US$428,000) annually will need e-invoices with tax verification codes as well.
Benefits of Electronic Invoices
Early adoption of e-invoicing system brings many benefits to enterprises, such as cutting down transportation expenses, decreasing administration expenses, minimizing transaction fraud, providing transparency and most importantly scaling down the overall operational costs significantly.
The traditional and manual system how to send paper invoices via post delivery in Vietnam is expensive. Every 200 invoices cost a company US$100 with additional delivery charges of US$100 to US$200.
The new e-invoice system will only cost a company US$15 for 300 pieces of e-invoices and up to US$15,000 for 1,000,000 e-invoices with zero cost in delivery or additional charges. As a result, businesses will be able to achieve up to a 90% cost-saving.
In other words, the government expects a VND 1 trillion (US$ 43.9 million) saving with 2.5 billion e-invoices issued annually.
Adopting the E-Invoice System
The best time for companies to embrace the e-invoices in Vietnam is now.
Not only it is mandatory for most Vietnamese entities and individuals in business, but the cost-saving for these subjects is enormous. However, the introduction of e-invoice is not without its challenges when moving from paper invoicing to e-invoice.
During every stage of its implementation, Cekindo provides an end-to-end service that includes the collection of required documents, registration and application of e-invoice system, an organization of training courses, and other consultation assistance for every business process.
Contact us today and get a free quotation on adoption of e-invoicing system in your business.