Vietnamese Firms Shifting to E-Invoices

February 5, 2018 Posted by Vietnam Briefing Reading Time: 4 minutes

By: Dezan Shira & Associates
Editor: Koushan Das

According to Vietnam’s General Department of Taxation, around 3,000 firms have started to use e-invoice for its transactions, an increase from only 656 firms in 2016. The Ministry of Finance is also drafting a new circular on e-invoice to make it compulsory for enterprises and State-owned firms to use e-invoices from July 1, 2018. E-invoices not only allow firms and tax authorities to save costs and reduce administrative burden but also helps in controlling billing frauds.

Most of the firms shifting towards e-invoices are from Hanoi and Ho Chi Minh City and are mostly involved in the trade and services. The exact number of firms who used e-invoices in 2017 is 2,939, an increase from 30 in 2011, 331 in 2015, and 656 in 2016. A total of 1.6 billion e-invoices were used last year.

Although the number of firms using e-invoices has increased, it is still a small share of the 560,000 businesses. The government hopes that with improving IT infrastructure, a larger number of firms will shift away from paper invoices in 2018.

Advantages of e-invoices

E-invoices not only saves time and cost but also reduces the administrative burden and helps in overcoming billing frauds. As per government estimates, if 2.5 billion invoices are used in a year, firms can save around VND 1 trillion (US$43.9 million).

In addition to reducing the burden and cost for enterprises, e-invoices also help tax authorities in minimizing fraud. Electronic invoices also led to the creation of a database of invoices for tax authorities, which help in reducing cases of fake or multiple invoices.

Challenges

Although the number of firms using e-invoices has increased, it is still a small share of the total number of businesses in Vietnam. Enterprises will need time to get familiar with the system and enhance their IT infrastructure for a smoother transition to e-invoices.

In addition, limited understanding continues to delay the use of e-invoices by firms and customers. Also, agencies responsible for goods inspection along with customers continue to use paper invoices out of habit, further delaying the use of e-invoices.

The Ministry of Finance is currently drafting a new circular on electronic invoices to make it compulsory for firms and State agencies. As of now, the probable implementation date is July 1, 2018. The draft will also provide clarity about cases in which e-invoices cannot be used and tax authorities will be liable for printing and providing the invoices for enterprises.

About Us

Vietnam Briefing is published by Asia Briefing, a subsidiary of Dezan Shira & Associates. We produce material for foreign investors throughout Eurasia, including ASEAN, China, India, Indonesia, Russia & the Silk Road. For editorial matters please contact us here and for a complimentary subscription to our products, please click here.

Dezan Shira & Associates provide business intelligence, due diligence, legal, tax and advisory services throughout the Vietnam and the Asian region. We maintain offices in Hanoi and Ho Chi Minh City, as well as throughout China, South-East Asia, India, and Russia. For assistance with investments into Vietnam please contact us at vietnam@dezshira.com or visit us at www.dezshira.com

‍

Dezan Shira & Associates Brochure
Dezan Shira & Associates is a pan-Asia, multi-disciplinary professional services firm, providing legal, tax and operational advisory to international corporate investors. Operational throughout China, ASEAN and India, our mission is to guide foreign companies through Asia’s complex regulatory environment and assist them with all aspects of establishing, maintaining and growing their business operations in the region. This brochure provides an overview of the services and expertise Dezan Shira & Associates can provide.

An Introduction to Doing Business in Vietnam 2017
An Introduction to Doing Business in Vietnam 2017 will provide readers with an overview of the fundamentals of investing and conducting business in Vietnam. Compiled by Dezan Shira & Associates, a specialist foreign direct investment practice, this guide explains the basics of company establishment, annual compliance, taxation, human resources, payroll, and social insurance in this dynamic country.

Managing Contracts and Severance in Vietnam
In this issue of Vietnam Briefing, we discuss the prevailing state of labor pools in Vietnam and outline key considerations for those seeking to staff and retain workers in the country. We highlight the increasing demand for skilled labor, provide in depth coverage of existing contract options, and showcase severance liabilities that may arise if workers or employers choose to terminate their contracts.