Combating tax loss in e-commerce transactions

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Improve the efficiency of tax management in e-commerce transactions. Photo: H.Anh

Significant challenges for Tax authorities in revenue management

According to Director General of the General Department of Taxation Mai Xuan Thanh, the rapid and explosive development and many new forms of e-commerce have posed new and significant challenges for Tax authorities in tax management.

They are the ability to comprehensively manage revenues, determination of tax payers and tax bases, recognition of types of income as a basis for taxation, and control of business transactions to manage taxable entities and control of cash flow.

​To strengthen the management of e-commerce activities and business activities on digital platforms, the Ministry of Finance has approved the Project "Tax management for e-commerce activities in Vietnam", and issued a master plan to implement solutions in the project (issued together with Decision No. 2146/QD-TCT dated November 12, 2021).

Based on the master plan of the Ministry of Finance, the General Department of Taxation has issued a detailed plan attached to Decision No. 1741/QD-TCT dated November 29, 2021 to implement the project. Accordingly, the General Department of Taxation focuses on developing, proposing, and implementing short-term and long-term tax management solutions to improve the efficiency of tax management in e-commerce activities.

According to data reported by tax departments, through coordination with local departments, branches, and commercial banks, tax authorities nationwide have reviewed organizations and individuals doing e-commerce businesses to put them under management, require declaration in accordance with reality, adjust tax revenue or handle tax arrears.

As a result, in 2021 revenue reached VND261 billion, in 2022, it was VND716 billion VND (equal to 274% of 2021), in the first 10 months of 2023 it was VND536.5 billion.

Besides the results achieved, the tax management for e-commerce activities still faces many difficulties and shortcomings.

Because the transactions are processed online worldwide, buyers and sellers neither need for direct contact nor visit at fixed business location.

E-commerce business households and individuals often do not make business registration, tax registration, or have a clear business address. In addition, there are many people using others’ personal information to register for e-commerce business, so it is difficult for the management.

In particular, the business activities of foreign suppliers are conducted entirely on a digital platform, via the internet, making it difficult for the Tax authorities to collect information and build a list of foreign suppliers to request them make tax registration, declaration and payment.

Develop appropriate solutions to meet the practice of e-commerce developments

According to Deputy Director General of the General Department of Taxation Mai Son, in order for the tax collection for e-commerce to be more effectively, specialized units need to focus on identifying subjects participating in e-commerce business, thereby proposing specific solutions to each group.

Regarding tax management methods and ways to collect information through entities related to e-commerce business activities such as owners of e-commerce trading floors, foreign suppliers without business establishments in Vietnam, shipping units and payment intermediaries to research to develop solutions to meet the practice of e-commerce developments.

Director General Mai Xuan Thanh suggested that the Tax sector needs to immediately implement a number of key contents. Accordingly, the presiding unit has a comprehensive report on tax management in e-commerce, which evaluates the results, reviews remaining problems and propose management solutions for each group to combat tax loss in e-commerce transactions.

At the same time, continue to promote communication, guide people tax declaration and payment on income from e-commerce activities and publicize the list of tax debtors on mass media.

In addition, research and apply measures to enforce tax debt for taxpayers who have not fulfilled their tax obligations.

According to Mr. Mai Xuan Thanh, tax management in e-commerce is difficult, so the advisory agencies of the General Department of Taxation need to focus on carefully researching the types of e-commerce, and work with relevant ministries and agencies to propose appropriate solutions to meet development and practical requirements.

According to the report of the General Department of Taxation, the strengthening of tax management for e-commerce and business activities on digital platforms, in 2023, the General Department of Taxation has strongly and effectively deployed tax management for e-commerce and business activities on digital platforms.

The e-Portal for foreign suppliers has made Vietnam one of the leading countries in the ASEAN region in tax collection via e-portal for cross-border foreign suppliers.

To date, there have been 74 foreign suppliers who have registered, declared and paid taxes through the e-Portal for foreign suppliers. The total tax paid by foreign suppliers VNDis 8,096 billion, of which 6,896 billion VND was declared and paid directly through the e-Portal and VND1,200 billion was paid by an authorized party in Vietnam.

Regarding the e-commerce portal of the General Department of Taxation, up to now, 357 e-commerce trading floors have been recognized, of which many have a large market share such as: Shopee, Lazada, Sendo, Voso, Tiki. …

Quang Ninh Customs solve many violations through e-commerce

At the same time, the tax agency handled violations for 179 businesses and 1,061 individuals with business activities on the e-commerce trading floors with a fine of about VND275 billion.