Official Dispatch 5180/CTHN-TTHT 2021 regarding the use of e-signature on invoices and contracts

To: Daisei Veho Works Company Limited
(Address: 2^nd Floor, Building 25T2, Lot N05, Tran Duy Hung Street, Trung Hoa Ward, Cau Giay District, Hanoi - Tax identification number: 0107819899)

In response to the Daisei Veho Works Company Limited’s Official Dispatch No. 02-2021/DSVN/CV dated February 04, 2021 (hereinafter referred to as the Official Dispatch) that replaces the Official Dispatch No. 01-2021/DSVN/CVN dated January 21, 2021, on the use of e-signature on commercial invoices and economic contracts, Hanoi Tax Department has the following opinions:

- Pursuant to the National Assembly’s Law on E-Transactions No. 51/2005/QH11 dated November 29, 2005

+ Article 4 prescribes that:

“...6. An e- transaction means a transaction implemented by electronic means.”

+ According to Article 15 on storage of data message:

“1. In cases where the law requires records, files or information to be stored, such records, files or information can be stored in the form of data messages when the following conditions are satisfied:

a) The information in the data message is accessible and usable for reference when necessary;

b) The contents of such data message are stored in the very format in which it was originated, sent or received, or in a format which can be demonstrated to represent accurately its contents;

c) Such data message is stored in a manner to enable the identification of its origin, destination, and the date and time when it was sent or received.

2. Contents and time limit for storage of data message shall comply with the provisions of law on storage.”

+ Article 33 prescribed e-contracts as follows:

E-contracts mean contracts established in the form of data messages provided for in this Law.”

+ Article 34 stipulates the recognition of legal validity of e-contracts as follows:

The legal validity of an e-contract cannot be disclaimed for the sole reason that it is expressed as a data message.”

+ Principles of entry into and execution of e-contracts are prescribed in Article 35 as follows:

“1. Participating parties shall have the right to reach agreement on the use of electronic means in the entry into and execution of contracts.

2. The entry into and execution of an e-contract shall comply with the provisions of this Law and law on contracts.

3. When entering into and executing e-contracts, the parties shall have the right to reach agreement on technical requirements, certification, conditions to ensure integrity and confidentiality related to such e-contracts.”

- Pursuant to the Government's Decree No. 165/2018/ND-CP dated December 26, 2018, on e-transactions in financial activities

+ Article 3 prescribes that:

“...3. “E-documents in financial activities” (below referred to as e-documents) means information created, sent, received and stored by electronic means when e-transactions are conducted in financial activities. They include documents, reports, statements, contracts, agreements, information about transactions, information about the performance of administrative procedures, and other information and data specified by specialized laws...”

+ Article 5 stipulates the legal validity of e-documents as follows:

“Article 5. Legal validity of e-documents

1. E-documents must fully satisfy the state management requirements and comply with the relevant specialized laws. The display format, creation, sending, receipt and legal validity of e-documents must comply with the Law on E-Transactions.

2. An e-document is valid as an original when:

a) It bears a digital signature of the agency, organization or individual that has created it and related responsible agencies, organizations and individuals as prescribed by the relevant specialized laws

b) The information system has measures to ensure its integrity in the course of transmitting, receiving or storing it in the system; to recognize the agency, organization or individual that has created it and related responsible agencies, organizations and individuals that have participated in processing it, and applies one of the following measures to authenticate the agency, organization or individual that has created it and related responsible agencies, organizations and individuals that have participated in processing it: authentication by digital certificates, biometric authentication, and authentication by two or more factors, including the factor of single-use or random authentication code.

c) Another measure which is applied as agreed upon by the parties to the transaction to ensure the integrity of data, and authenticity, irrevocability and compliance of the e-document with the Law on E-Transactions.”

+ According to Article 9 on storage of e-documents:

“1. E-documents shall be stored in accordance with the relevant specialized laws and suitability to the environment and conditions for e-storage and other relevant provisions of the law on archives.

2. Agencies and units that store e-documents shall satisfy the conditions prescribed in Clause 1, Article 15 of the Law on E-Transactions.”

- Pursuant to the Government's Decree No. 130/2018/ND-CP dated September 27, 2018, detailing the Law on E-Transactions regarding digital signatures and digital signature certification services

+ Article 8 stipulates the legal validity of digital signatures as follows:

“1. In case a document is required by law to bear a signature, a data message shall be considered satisfying such requirement if it is signed by a digital signature which is secured under Article 9 of this Decree.

2. In case a document is required by law to bear the seal of an agency or organization, a data message shall be considered satisfying such requirement if it is signed by a digital signature of the agency or organization which is secured under Article 9 of this Decree.

3. Foreign digital signatures or digital certificates permitted for use in Vietnam under Chapter V of this Decree have the same legal validity and effect as digital signatures or digital certificates issued by public digital signature certification authorities of Vietnam.”

Conditions for use of a foreign digital certificate are prescribed in Article 43 as follows:

“1. It remains valid for use.

2. It is permitted in writing by the Ministry of Information and Communications for use in Vietnam or accepted in international transactions. No permission is required for the use of foreign digital certificates for servers and software.”

+ According to Article 44, users of foreign digital certificates include:

“1. Vietnam-based foreign organizations and individuals.

2. Vietnamese organizations and individuals that wish to conduct e-transactions with foreign partners from countries where digital certificates of domestic digital signature certification authorities are not yet recognized.”

The scope of operation and validity period of permits for use of foreign digital certificates in Vietnam is prescribed in Article 45 as follows:

“1. The scope of operation covers e-transactions of users of foreign digital certificates specified in Article 44 of this Decree.

2. The validity period of a permit for use of a foreign digital certificate in Vietnam is 5 years but must not exceed that of such digital certificate.”

According to Article 50, obligations of a user of a foreign digital certificate in Vietnam include:

“1. To use the digital certificate within the scope stated in the permit for use of the foreign digital certificate in Vietnam.

2. To report on the use of the foreign digital certificate in Vietnam to the Ministry of Information and Communications when an incident occurs or upon request.”

- Article 4 of the Ministry of Finance’s Circular No. 96/2015/TT-BTC dated June 22, 2015, providing guidance on enterprise income tax; amending and supplementing Article 6 of Circular No. 78/2014/TT-BTC (amended and supplemented in Clause 2 Article 6 of Circular No. 119/2014/TT-BTC and Circular No. 151/2014/TT-BTC) provides regulations on deductible and non-deductible expenses when determining taxable income as follows:

“1. Except for the non-deductible expenses prescribed in Clause 2 of this Article, enterprises may deduct any expense that fully satisfies the following conditions:

a) Actual expenses related to their production and business activities;

b) Expenses with adequate lawful invoices and documents;

c) Expenses for purchase of goods or services valued at VND 20 million or more (VAT-inclusive prices) per invoice with non-cash payment documents.

Non-cash payment documents must comply with legal documents on value-added tax.

…”

Based on the aforementioned provisions, in case the company has reached an agreement with foreign providers and clients on using e-documents (e-contracts or e-documents, etc.) in transactions, provided that conditions specified in the Law on E-Transactions No. 51/2005/QH11, Decree No. 165/2018/ND-CP, Decree No. 130/2018/ND-CP and guiding documents are satisfied, in compliance with instructions provided in Article 4 of Circular No. 96/2015/TT-BTC, expenses may be included in deductible expenses for determining taxable income.

Any difficulties arising in the course of implementation, please refer to Hanoi Tax Department's guiding documents on the website http://hanoi.gdt.gov.vn or contact the Inspection - Examination Division 2 for support and settlement.

Hanoi Tax Department hereby informs Daisei Veho Works Company Limited for implementation./.