Challenges of collecting e-commerce tax losses

Deputy Prime Minister and Finance Minister Ho Duc Phoc said that Vietnam’s total e-commerce revenue reached 20.5 billion USD last year and will reach 30.5 billion USD by 2025.

Vietnam is identified as the country with the fastest e-commerce growth in Southeast Asia. This raises requirements for tax management and management of goods quality and anti-fraud on e-commerce platforms.

A representative of the Ministry of Finance (MoF) said that tax management data in the last two years recorded tax collection results from organisations and inpiduals with e-commerce business activities at 83 trillion VND (3.42 million USD) in 2022, the tax paid was 97 trillion VND last year.

Tax management revenue from organisations and inpiduals with e-commerce business activities was 1.98 quadrillion VND in the first six months of this year.

Taxes paid amount to nearly 55 trillion VND. Twenty-six new foreign suppliers have registered, declared and paid taxes in Vietnam.

To implement the Government's direction, the General Department of Taxation (GDT) has issued many directives and documents requiring provincial and city tax departments to strictly manage tax receipts.

In addition, the tax authority has increased the exploitation and review of e-commerce databases, continued to add to the database, and reviewed the quality of information provided by the platform.

At the same time, it has organised inspections and examinations of enterprises in the e-commerce sector, strengthened tax management in the field of communications and digital content creation generating income from online advertising on cross-border platforms and reviewed information for organisations and inpiduals livestreaming for selling on social platforms.

The GDT has also worked with the focal points of ministries and branches and agreed on a detailed plan for connecting and sharing data between ministries and branches and unifying standards and regulations for connecting and sharing data.

To date, this unit has completed over 90 per cent of the review of the Ministry of Public Security's database with the tax code database to implement the conversion of using citizen identification cards as tax codes in accordance with regulations.

At the same time, it has completed the integration of using VNeID with tax management platforms of tax authorities and the results so far have been 663,157 connections with a total of 400,791 citizen accesses.

In addition, the GDT has initially completed the sharing of databases from the Ministry of Industry and Trade, the Ministry of Information and Communications and the State Bank of Vietnam, including data from 929 websites providing e-commerce services. Those include 130 organisations operating in the fields of telecommunications, advertising, radio and television, 144 million payment accounts including ten million accounts of organisations and over 134 million accounts of inpiduals at 96 commercial banks.

The results are essentially a database source for tax management of e-commerce. It is not only in big cities, tax management of e-commerce is also a concern of localities.

However, there are still many challenges in tax management, such as identifying and authenticating inpiduals and organisations participating in e-commerce activities, especially livestream sales activities, because taxpayers in these activities are anonymous.

In addition, the National Population Database is being connected with the databases and information systems of ministries, branches, and localities for household registration, tax, banking, and telecommunications of taxpayers, and this is being implemented for identification.

Therefore, the GDT said that the e-commerce database needed to be continued being reviewed and enriched from many sources such as data from e-commerce business platforms, data from shipping units and related ministries and branches.

Nguyen Thi Lan Anh, director of GDT’s Tax Administration Department on Small and Medium Enterprises and Business Households, Inpiduals said that the tax authority would continue to promote support and guidance for taxpayers participating in e-commerce business activities, livestream sales to declare and pay taxes in accordance with the law.
At the same time, it would coordinate with domestic platforms and foreign e-commerce platforms to communicate tax obligations of organisations and inpiduals doing business on the platforms.
The GDT will also put into operation an electronic information portal for inpiduals and business households engaged in e-commerce activities to conveniently fulfil their tax obligations./.