E-commerce: If you want to do business long-term, you must comply with the tax law

The General Department of Taxation has introduced new regulations on tax administration for digital business activities. Photo: ThuyLinh

VND1,000 billion of tax is paid by individuals in e-commerce

According to Mr. Dang Ngoc Minh, Deputy Director of the General Department of Taxation, reports from the Tax Departments in Hanoi and Ho Chi Minh City all recognized the strong development of online business models and online purchases on a much larger scale.

Currently, through the banking supervision and inspection agency, the General Department of Taxation has data on the transactions of individuals and businesses arising with foreign service supply platforms. Particularly for tax collection from individuals with revenue from Google, Facebook and YouTube. In the two years from 2019-2020, the revenue from these individuals has reached approximately VND1,000 billion. This is the revenue for individuals who have revenue from Google and Facebook and is determined through the revenue that the business pays to individuals through advertising activities. There are individuals who self-declare, in other cases the tax authorities request to provide.

"For these cases, the management agency has the right to request individuals and enterprises, when they have registered for tax payment in Vietnam, they must be responsible for exchanging information and pay taxes to tax authorities and fulfill all tax obligations," Mr. Dang Ngoc Minh said.

To make a genuine business, you must comply with the law

"In terms of institutions, the General Department of Taxation has introduced new regulations on tax administration for digital-based business activities, especially cross-border transactions. These regulations are included in the Law on Tax Administration. No 38, and are guided in the Decree and there will be a circular guiding specific stakeholder responsibility, including intermediaries, platform providers, relevant ministries and the banking system," said the leader of the General Department of Taxation.

In addition, the taxation industry is preparing resources to change the direction of tax administration for this business. Specifically, the tax authority has monitored and surveyed online business systems, individuals and businesses that generate revenue from foreign service providers. From there, proposing a plan to coordinate with the Market Manager and the payment intermediary to report to the competent authorities to propose management solutions.

Particularly for foreign-based businesses, the General Department of Taxation has a management plan, in which, when developing circulars, the tax agency plans to invite these units to exchange information on the first principle to comply with regulations and policies on tax administration of Vietnam.

In particular, in order to avoid the tax administration agency cooperating with commercial banks to control the cash flow of income from e-commerce activities, many individuals and organizations circumvent the law by switching to non-bank payment methods such as paying with Bitcoin or through international payment gateways. Some of the favorite payment gateways used in Vietnam are Paypal and Payoneer.

These are major online payment service providers that allow cross-country remittances and payments. Accordingly, when receiving foreign currencies paid through accounts on international payment gateways or paid in Bitcoin, individuals with the income above will sell to those who wish to transfer money from Vietnam to overseas, then receive cash in Vietnam. By doing this, those who earn income from e-commerce cannot be tracked by the tax authorities, causing tax evasion.

Mr. Dang Ngoc Minh said that in these cases, first of all, it is necessary to know whether such payment is allowed. For example, in paying with Bitcoin, currently, Vietnam does not allow it but in fact there is still such activity. Therefore, the tax authority will have to coordinate with relevant agencies and banks to identify these issues.

"These are rare cases to avoid taxes. However, I believe that compliance with the law is the responsibility of citizens and businesses, no one can avoid it forever. When people want a genuine and long-term business, they must obey the law,” said the Deputy Director of the General Department of Taxation.