Vietnam's Invoice Shake-Up: Broader Scopes and Stricter Timelines

The Vietnamese Government issued Decree 70/2025/ND-CP on March 3, 2025. This decree takes effect on June 1, 2025, and amends several articles of Decree 123/2020/ND-CP on invoicing requirements, including:

• Expanding the scope of e-invoice users to include foreign suppliers conducting e-commerce, digital platform-based businesses, or other services in Vietnam without a permanent establishment. These entities can now voluntarily register for e-invoice issuance and value-added tax (“VAT”) invoices.
• Clarifying in detail the timing of invoice issuance. Invoicing deadlines are now tied to specific events, such as customs clearance, ownership transfer, or service completion.
• Requiring more detailed invoice content. to enhance transparency. It mandates the inclusion of full buyer information such as name, address, and tax identification number or personal ID.
• Revising the treatment of incorrectly issued invoices.
• Providing invoicing instructions for Export Processing Enterprises (“EPEs”). EPEs engaging in non-export processing activities are required to issue sales invoices if they adopt the direct method of VAT declaration and must issue VAT invoices if they apply the credit (deduction) method for VAT purposes.

This decree presents a regulatory obligation for foreign e-commerce providers. Meanwhile, local companies should consider reviewing their invoicing systems, internal controls, and personnel training to ensure readiness before the implementation in June.

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Contributed by Luther Vietnam Law LL.C.

Navigating Labor Arrangements in Vietnam: Mock Employment and Service Contracts in Vietnam

Vietnamese-based companies frequently choose to involve foreign personnel in Vietnam through service contracts rather than formal employment. Nevertheless, these service contracts, regardless of their designation, may still be classified as labour contracts by Vietnamese authorities. This determination typically stems from the presence of specific duties, pay structures, managerial arrangements, and supervisory agreements established between the company and the foreign individuals. The risk of the service contract being classified by the authorities as a labour contract is high, especially if the foreign personnel only work for (or provide services to) one company.

In Vietnam, foreign workers usually require a work permit or a work permit exemption to work legally. Resorting to service contracts to circumvent formal employment agreements and essential permits could be seen as non-compliance, leading to potential risks and consequences:

• Neglecting to obtain valid work permits or work permit exemptions may lead to penalties for both the company and foreign workers, potentially resulting in the deportation of the foreign employee.
• Vietnamese tax authorities typically scrutinize income generated from service provision by individuals. In many instances, funds paid by an organisation to an individual are categorised as "salary and wages", resulting in the rejection of tax declarations subject to flat tax rates.
• Moreover, failing to fulfil mandatory insurance requirements could expose both the company and foreign workers to administrative sanctions upon detection.

Essentially, resorting to service contracts in Vietnam to circumvent formal employment agreements carries inherent risks that employers should steer clear of.

Contributed by Luther Vietnam Law LL.C.