WHEN IS A BUSINESS FORCED TO USE AN E-INVOICE?

Dear FDVN Law Firm. The law on tax administration just comes into effect, I read the information that the time when businesses are required to use e-invoices is from November 1, 2020, some other information is July 1, 2022. Therefore, I would like to know the exact time, and if it passed the time limit mention above that my company hasn't switched to use e-invoices, shall we be applied any penalties?

FDVN’s opinion:

[1] General provisions for electronic invoices:

 In Clause 1 Article 89 of Law on tax administration, 2019 prescribed: “An electronic invoice means an invoice in the form of electronic data, issued by the goods seller or service providers to record the goods sale or service provision in accordance with regulations of law on electronic accounting and tax, including the invoices generated by cash registers that are digitally connected to tax authorities.”

Rules for issuance, management, and use of electronic invoices is prescribed in Article 90 of Law on tax administration 2019 as follows:

“1. When selling goods/services, the seller shall issue and send electronic invoices to buyers. The electronic invoices shall follow standard formats and contain sufficient information in accordance with tax laws and accounting laws, regardless of the value of each sale.

2. The sellers that use cash registers shall register to use electronic invoices generated by cash registers that are digitally connected to the tax authorities.

3. The registration, management, and use of electronic invoices in the sale of goods/services shall comply with regulations of law on electronic transactions, accounting, and tax.

4. Electronic invoices shall be authenticated by tax authorities according to information provided on the invoices by the enterprises, business organizations, other organizations, household businesses, and individual businesses. Enterprises, business organizations, other organizations, household businesses and individual businesses are held responsible for the accuracy of the information on their invoices.”

[2] The time when businesses have to use the e-invoices:

Some reasons why there is different information about official time businesses have to use e-invoices are:

Previously, Clause 2, Article 35 of Decree 119/2018/ND-CP on e-invoices have regulation on enforcement as follows: “The implementation of e-invoices and authenticated e-invoices as provided by this Decree shall be completed by enterprises, economic or other organizations, business households and individuals by November 1, 2020.”

Recently, the National Assembly has passed the Law on Tax Administration 2019, which comes into effect from July 1, 2020, prescribed in Clause 2, Article 151 as follows: “Regulations on electronic documents and invoices of this Law come into force from July 01, 2022; organizations and individuals are recommended to apply regulations on electronic documents and invoices in this Law before July 01, 2022.”

These provisions have given a question to many businesses about the official mandatory time to use e-invoices.

However, it is necessary to clearly distinguish the scope of these regulations. Decree 119/2018/ND-CP prescribed details about using e-invoices when selling goods and providing services; duties and powers of tax administration agencies at all levels and related agencies and organizations of the management and using e-invoices; rights, obligations, and responsibilities of agencies, organizations, and individuals in the management and use of e-invoices. Whereas, the Law on tax administration in 2019 only has general provisions on electronic invoices such as the concept of electronic invoices; principles of preparing, managing, and using e-invoices; applying electronic invoices when selling goods or providing services; e-invoice services without regulations on the time of registration, revitalization of e-invoices.

Moreover, Clause 3 Article 26 in Circular 68/2019/NĐ-CP prescribed: “From November 01, 2020, enterprises, business organizations, other organizations, household businesses, and individual businesses shall apply for use of electronic invoices in accordance with this Circular.”

Therefore, enterprises, business organizations, other organizations, household businesses have to apply for use of electronic invoices from November 01, 2020.

[3] If it passed the time limit as prescribed that the enterprises haven’t switched to use electronic invoices, shall enterprises be applied any penalties?

Currently, there is no official regulation on the level of sanction for not registering to use electronic invoices from November 1, 2020. However, unlawful actions on invoices can be handled for administrative violations which are regulated specifically in Point c, Clause 1, Article 24, and Clause 2, Article 24 of the Law on the handling of administrative violations in 2012. Penalties can be up to VND 50.000.000 for individuals and VND 100.000.000 for organizations.

Therefore, enterprises should switch the form of invoices within the time limit specified in Law in order not to disrupt or affect their business operations.

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