In the age of digital and the development of online information management technology, aiming at convenience, reducing administrative procedures, avoiding cases of errors, loss, fire, damage, the existence and development of e-invoices is the most effective solution and tool today.
Previously, e-invoices were quite popular and widely applied due to its advantages as well as clearly stipulated in the law. However, after the process of using them and encountering some shortcomings, the Government has issued Decree No. 123/2021/ND-CP (“Decree 123”) which supplements and amends a number of regulations on e-invoices for businesses to use conveniently.
This newsletter shall explain new points in the legal provisions on e-invoices from the effective date of Decree 123, i.e. July 1, 2022.
What is e-invoice?
E-invoice is an invoice presented in the form of electronic data made by an organization or individual that sells goods or provides services by electronic means to record information on selling goods or providing services according to regulations of law, including cases invoices are generated from cash registers that have an electronic data transfer connection with tax authorities.
E-invoices are of two types: (1) E-invoices with tax authority’s code and (2) e-invoice without tax authority’s code. The tax authority code consists of (1) a transaction number – a sequence of numbers generated by the tax authority and (2) a string of characters encoded by the tax authority based on the merchant’s information on the invoice.
Notably, Decree 123 does not require enterprises, economic organizations, other organizations, business households and individuals to complete the implementation of e-invoices, e-invoices with the tax authority’s code from November 1, 2020
Subjects of application, in the past, subjects applied to e-invoices only included: (i) organizations, enterprises and individuals selling goods or providing services; (2) organizations and individuals purchasing goods and services; (3) organizations providing e-invoice services; (4) tax administration authorities at all levels and organizations and individuals related to the management and use of invoices. The Government stipulates 03 new subjects, which are:
- Organizations which collect taxes, fees and charges;
- Organizations which are responsible for deducting personal income tax;
- Organizations which print invoices and receipts, provide software for printing receipts.
According to this new Decree, there are 02 new types of e-invoices:
- E-invoices for the sale of public property; and
- E-invoices for the sale of national reserve.
Regarding the content of an e-invoice, it is not necessary to have the content of the unit of calculation, quantity, unit price, the name of goods and services recorded providing goods and services under the contract signed between the parties in construction, installation, production and supply of products and services activities of defense and security enterprises serving national defense and security activities according to the Government’s regulations. If the e-invoice has been issued with a time of digital signature on the invoice different from the time of invoice issuance, the time of tax declaration is the time of invoice issuance.
Regarding invoicing authorization, according to the new regulations, goods sellers and service providers which are enterprises, economic organizations and other organizations could authorize a third party to issue electronic invoices for sale of goods and services providing activities. Specifically:
- Invoices authorizing a third party must show the name of the seller as the authorizing party.
- The authorization must be determined in writing between the authorizing party and the authorized party, showing full information about the authorization invoice (the purpose of the authorization; the duration of the authorization; the method of payment of the authorization invoice); and
- Must notify tax authorities when registering to use e-invoices.
- In case the authorized invoice is an electronic invoice without the tax authority’s code, the authorizing party must transfer the e-invoice data to the tax authority through the service provider.
E-invoices are used to minimize the use of illegal invoices and illegal use of invoices. However, there are still illegal acts of using invoices such as: using e-invoices without registration with the tax authority, using e-invoices without the tax authority’s code in case of using e-invoices with the tax authority’s code…
Decree 123/2020/ND-CP also has regulations on handling errors and incidents for e-invoices; provide and use e-invoices. These contents have been presented more clearly in other specific newsletter for your reference.
E-invoices are still difficult to access for businesses, economic organizations, business households and individuals that do not conduct transactions with tax authorities by electronic means, do not have information technology infrastructure, accounting software system, e-invoicing software to use e-invoices and to transmit e-invoice data to buyers and to tax authorities.
Writing time: May 10, 2021.
This article is based on the current laws at the above recorded time and may no longer be relevant at the time readers access this article due to changes in applicable law and specific cases which the readers want to apply. Therefore, this article is for reference only.