A new tax regulation is also attracting attention. E-commerce platforms and digital platforms with payment functions will have to deduct and pay taxes on behalf of households and individuals doing business on their platforms.
The Director of the Ho Chi Minh City Tax Department stated that this is one of the key projects to be implemented in the near future.
Tax base for businesses
Currently, there are approximately 14 large global technology corporations and 8 cross-border e-commerce websites that generate income in Vietnam and have fulfilled their tax obligations.
The tax revenue comes from Vietnamese organizations that have signed online advertising contracts with foreign organizations that do not have legal entities in Vietnam, such as Google, YouTube, Facebook, etc. Therefore, these legal entities are obligated to declare and pay taxes on behalf of these foreign entities.
The amount of tax revenue generated from 2018 to the end of September 9.2021 was approximately 4.099,68 billion VND. This includes taxes from several large corporations such as Facebook (1.576,72 billion VND), Google (1.529,25 billion VND), and Microsoft (533,01 billion VND).
The tax base for individuals with income.
Individuals who earn income from platforms such as Google, Facebook, YouTube, Netflix, Apple, etc., must pay personal income tax.
According to data provided by four commercial banks, in 2020 and the first three months of 2021, 4.784 organizations and individuals received income from Google, Facebook, YouTube, Netflix, and Apple, totaling US$48 million and VND 20 billion. Recently, the Ho Chi Minh City Tax Department, in coordination with the Department of Broadcasting, Television and Electronic Information (Ministry of Information and Communications), worked with Google's partner companies in Vietnam (commonly known as MCNs – Multi-Channel Networks) responsible for managing YouTube channels that produce their own digital content and pay Google's fees to individual YouTubers in Vietnam. Subsequently, they issued requests to these MCNs to deduct taxes and remit them to the state budget in accordance with regulations. The tax authorities also provided the names of organizations and individuals providing digital content services who received income from Google but did not agree to the tax deduction. The results show that 3.101 individuals generated revenue of 379 billion VND, of which 20 billion VND has been remitted to the state budget.
Provide data to the tax authorities electronically.
From January 1, 2022, e-commerce platforms began providing information to tax authorities electronically using standardized data. Prior to this, the General Department of Taxation, in coordination with the Ministry of Industry and Trade, surveyed several e-commerce platforms in August to develop a data standard and drafted a standard for feedback from these platforms regarding tax payment. From October 1, 2021, to January 1, 2022, the General Department of Taxation and the e-commerce platforms implemented application upgrades to ensure the provision of information in the standardized format electronically.
To manage sales activities on e-commerce platforms and social media sites (Facebook, YouTube, Zalo, etc.) that employ logistics and delivery companies to deliver goods to buyers and authorize these companies to collect payments, the tax authorities have developed a mechanism to provide information on logistics and delivery service providers, especially those collecting cash on delivery (COD) payments from e-commerce businesses, to the tax authorities. This information includes the quantity of goods transported and the amount of money collected. As of the end of June 6.2021, data collected for 2017 and 2018 in the city alone covered 14.686 organizations and individuals, with a total collected amount of nearly 15.100 billion VND. Currently, the tax authorities are working to determine the tax obligations of the organizations and individuals on the list, requesting explanations and taking action according to regulations in cases of violations.
Law No. 38 on Tax Administration, effective from July 1, 2021, addresses the coordination mechanism between tax authorities and other agencies, including coordination with banks, thus enabling more comprehensive data collection and contributing to combating revenue loss in the e-commerce sector.
