Insight Hub

By LevelAdvise Legal Team | Ho Chi Minh City

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The introduction of Decree No. 70/2025/ND-CP marks a pivotal shift in Vietnam's fiscal infrastructure, mandating the use of electronic invoicing across a wide range of sectors. This regulation, effective June 1, 2025, aims to enhance tax compliance and streamline operations within the country's evolving digital economy. With provisions affecting both local and foreign enterprises, Vietnam positions itself for regional leadership in digital fiscal management. This article explores the implications of these regulatory changes, examining the benefits, challenges, and strategies for successful adaptation.

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The Evolution of E-Invoicing in Vietnam

Vietnam's landscape of e-invoicing has transformed significantly from its early initiatives to the comprehensive reforms represented by Decree No. 70/2025/ND-CP. Initially, the nation engaged in fragmented digitization efforts, lacking cohesive regulatory frameworks until 2018 when discussions gained momentum alongside efforts to modernize VAT regulations. A notable milestone occurred with the issuance of the Resolution No. 02/NQ-CP, which emphasized simplifying administrative procedures and provided the foundation for subsequent e-invoicing legislation.

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The decisive advancement came with Decree No. 123/2020/ND-CP, enacted in October 2020. This decree marked a pivotal moment as it mandated the adoption of e-invoicing across all commercial sectors, requiring households and individual entrepreneurs to comply when their annual revenues met specified thresholds. This legislation introduced authenticating mechanisms for electronic invoices, thus enhancing compliance and transparency in tax reporting. It established processes for both authenticated and unauthenticated invoices, ensuring that a significant majority of taxpayers had to verify their invoices via the General Department of Taxation (GDT) before sending them to buyers, thereby mitigating many risks of tax evasion through real-time tracking of transactions.

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By July 1, 2022, the rollout was made mandatory nationally, demonstrating the government's commitment to tackling VAT fraud and narrowing the VAT gap. In this implementation phase, Vietnam shifted to a largely digital invoicing model, which improved tax collection efficiency and broadened the taxable base, as evidenced by a reported 18% year-on-year growth in tax revenues by late 2023.

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Decree No. 70/2025/ND-CP introduced vital amendments that specifically extend these requirements to foreign suppliers, who are now mandated to issue VAT invoices for digital services offered without a physical presence in Vietnam. This legislative change is instrumental in aligning Vietnam’s practices with international norms, aiming to prevent Base Erosion and Profit Shifting (BEPS) and enhance tax compliance among multinational corporations operating in its markets.

The evolution of e-invoicing in Vietnam reveals the government's strategic focus on modernizing the tax system and enhancing its enforcement capabilities. Lessons learned from early implementations have guided reforms to create a robust regulatory framework that supports all businesses, domestic and foreign alike, in contributing to the country’s revenue system, while also fostering a culture of transparency and compliance in the digital age.

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Key Changes Under Decree No. 70/2025/ND-CP

Vietnam’s Decree No. 70/2025/ND-CP, issued on March 20, 2025, introduces significant reforms to the country’s e-invoicing system, taking effect from June 1, 2025. This decree builds upon the previous Decree No. 123/2020/ND-CP, aiming to modernize Vietnam’s tax administration by mandating broader e-invoicing requirements and enhancing compliance measures. Notably, it extends e-invoicing obligations to foreign e-commerce suppliers, a key shift designed to encompass digital transactions that were previously unregulated.

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One of the critical amendments includes the requirement for foreign suppliers, particularly those without a permanent establishment in Vietnam, to register voluntarily for the e-invoice system if they engage in e-commerce activities targeting Vietnamese consumers. This includes a commitment to transmit invoice data to the tax authority within five days of each transaction. Such measures significantly enhance tax compliance and transparency, aligning Vietnam with global standards aimed at combating VAT fraud, as emphasized in various OECD guidelines.

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Under Decree 70, all businesses generating revenue exceeding VND 1 billion (approx. USD 42,000) from direct sales must implement point-of-sale linked e-invoicing systems by December 31, 2025. This requirement prioritizes sectors like retail, hospitality, and food services, where the need for real-time transaction reporting is especially critical. The decree mandates that all invoices generated must include detailed transaction information, including buyer identification and specific service descriptions, thereby facilitating smoother tax audits and compliance checks.

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The implications of these reforms are manifold. By curbing tax evasion, particularly through digital channels, the Vietnamese government aims to reinforce its tax base and improve overall compliance. The integration of advanced standards, such as machine-readable QR codes on all invoices, is critical in this regard, as it supports real-time verification and enhances the integrity of transaction records.

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These changes not only reflect an urgent need for Vietnam to align its practices with global e-invoicing trends but also represent a step forward in building a more transparent and accountable digital economy. The enhanced requirements are expected to lead to improved tax compliance and enforcement mechanisms, setting a precedent for how emerging economies can leverage technology to optimize traditional systems.

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Impact on Small and Medium Enterprises

The mandatory shift to electronic invoicing, underscored by Decree 70/2025/ND-CP, presents significant challenges for small and medium enterprises (SMEs) in Vietnam. This regulation extends the e-invoicing mandate to all businesses and especially affects the approximately 6 million SMEs, which often lack the technological infrastructure necessary for compliance. The financial and operational burdens associated with upgrading systems and training employees pose substantial obstacles, particularly for micro-enterprises in rural areas where resources are limited.

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One of the primary challenges SMEs face is the financial cost of adopting e-invoicing. Estimates suggest that initial investments to implement these systems can represent up to 7-9% of annual revenues for small retailers, equating to ₫60-75 million (approximately $2,400–$3,000) in the first year alone. This figure reflects costs associated with hardware, software licenses, and employee training. Smaller businesses, especially those previously reliant on manual processes, must navigate the dual pressures of adopting complex systems while managing their existing operational costs.

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Moreover, many SMEs express concerns regarding increased tax transparency, fearing that greater visibility might lead to elevated tax liabilities. The apprehension about revealing true revenue figures often dissuades businesses from fully engaging with new technologies. For instance, a survey indicated that nearly 63% of SMEs reported insufficient IT infrastructure to comply with e-invoicing regulations, highlighting a major readiness gap.

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To assist SMEs in this transition, the government has introduced several support mechanisms aimed at mitigating these challenges. Initiatives include fiscal subsidies for equipment purchases and funding for training programs in collaboration with private sector partners like MISA [Source: MISA]. Furthermore, the establishment of free national e-invoice portals offers essential resources to SMEs unprepared for significant financial commitments.

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Despite the considerable difficulties, examples exist of SMEs successfully navigating this transition. Certain fashion retail stores have implemented cloud-based systems, leveraging real-time data to streamline operations and generate sales insights. These businesses exemplify proactive strategies such as gradual integration and utilizing government resources to facilitate compliance, showcasing a path toward embracing the digital shift while mitigating associated risks.

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Technological Adoption and Infrastructure

Vietnam’s adoption of mandatory electronic invoicing (e-invoicing) under Decree 70/2025/ND-CP marks a transformative shift toward digitizing fiscal processes while addressing systemic challenges in tax compliance. By mandating electronic invoices generated from cash registers connected directly to tax authorities for business households earning over ₫1 billion annually, the government aims to enhance transparency while modernizing financial ecosystems. However, the successful implementation hinges on robust technological infrastructure encompassing digital signatures, secure data transmission, system interoperability, and stakeholder collaboration. This report analyzes these pillars alongside persistent challenges, practical solutions, and future trajectories shaping Vietnam’s e-invoicing landscape.

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A vital component of the e-invoicing framework is the use of digital signatures, which ensure the authenticity and integrity of invoices. Digital signatures rely on asymmetric cryptography, wherein a private key encrypts a one-way hash of the invoice, and a public key decrypts it during verification. This makes it technically infeasible to deny authorship, reinforcing legal compliance. However, many small businesses lack awareness of certificate authorities and best practices for key management, which can lead to risks of lost or leaked keys. Moreover, rural areas often face connectivity issues, delaying real-time signature validation against centralized databases. Solutions exist such as government-sponsored training programs on Public Key Infrastructure (PKI) management for SMEs and offline validation tools that allow temporary storage of signed documents during outages, syncing automatically upon reconnection.

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Additionally, secure data transmission is critical in the context of Vietnam’s increasing cyber threat landscape. Recent incidents, such as the significant data breach at Vietnam Post, highlight vulnerabilities in unsecured systems. For e-invoicing, employing encrypted channels for data flows between businesses, tax authorities, and third-party platforms is essential. Current standards include mandatory TLS/SSL encryption for API connections and role-based access control to limit data accessibility based on user roles, such as cashiers versus accountants.

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The interoperability of e-invoicing systems among various stakeholders—businesses, tax authorities, and solution providers—also poses challenges. Standards like XML are being recommended for uniformity, but disparities in technological capability, particularly among small enterprises, could hinder widespread adoption. To address these challenges, the government could facilitate the integration of standardized e-invoicing solutions while offering subsidies or incentives for SMEs to enhance their technological infrastructures.

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Ultimately, Vietnam's path toward effective e-invoicing will depend on strategic enhancements to its technological framework, comprehensive education for businesses on digital compliance, and robust cybersecurity measures to safeguard data integrity.

 

Looking Ahead: Future Trends in Digital Taxation

Vietnam’s digital taxation landscape is set to experience transformative changes following the implementation of Decree No. 70/2025/ND-CP, which mandates e-invoicing across sectors and expands the scope of tax regulations to include foreign digital platforms. As the country adapts to these reforms, several key trends are emerging, particularly in the realms of blockchain technology and artificial intelligence (AI), which are poised to significantly influence fiscal management and taxation policies.

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Blockchain technology is anticipated to play a substantial role in enhancing tax compliance and transparency. Its decentralized ledger enables real-time transaction recording, providing tax authorities with verifiable audit trails that can mitigate issues associated with under-reported sales and fraudulent behaviors. For instance, marketplace operators and foreign sellers will be required to link their tax identification numbers (TINs) to blockchain addresses, thereby facilitating traceability across the e-commerce ecosystem. Additionally, smart contracts could automate VAT payments, reducing compliance burdens and errors associated with traditional methods. As these technologies evolve, addressing interoperability with existing systems will be crucial to ensure seamless integration.

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Artificial intelligence is also set to reshape Vietnam’s approach to tax administration. The deployment of AI tools for predictive analytics will enhance the detection of tax evasion, enabling authorities to scrutinize discrepancies in reported incomes and identify high-risk taxpayers. By leveraging large datasets from various sources, including social media and transaction histories, the General Department of Taxation (GDT) can implement a more proactive compliance strategy, potentially recovering significant amounts in unpaid taxes. Furthermore, AI-driven chatbots can streamline taxpayer interactions, guiding individuals through compliance processes while also reducing the administrative load on human resources.

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As Vietnam continues to lead digital transformation efforts in the region, further innovations are anticipated to enhance fiscal management. These include developing cross-border interoperability frameworks, which will facilitate seamless transactions between Vietnam and other ASEAN markets. However, challenges remain, particularly regarding the digital literacy of small and medium-sized enterprises (SMEs), which could hinder effective implementation.

By embracing these technologies and trends, Vietnam is positioning itself as a frontrunner in digital taxation in Southeast Asia. The government's adaptability and commitment to integrating innovative solutions will be critical in fostering a transparent and efficient tax landscape that meets the demands of a rapidly evolving digital economy.

 

Conclusions

The transition to a comprehensive e-invoice system under Decree No. 70/2025/ND-CP represents a cornerstone in Vietnam's digital transformation journey. By enforcing electronic invoicing, Vietnam aims to improve transparency, reduce VAT fraud, and foster a more efficient tax system. Businesses, particularly SMEs, need to overcome technological and operational hurdles, ensuring compliance and maximizing the benefits of digital integration. As Vietnam strengthens its regulatory framework, enterprises must embrace technological advancements to maintain competitiveness in a rapidly digitizing world, setting a standard for future fiscal innovations.

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