E-commerce tax management needs close control

	Consultation on the scheme of cross-border e-commerce management
	E-commerce is motivation for export growth
	Need to manage import and export goods via e-commerce

The provision of services from abroad to Vietnam will still be subject to taxes such as Value Added Tax, Corporate Income Tax, and Personal Income Tax. Photo: T.Linh.

Applying taxes flexibly

Currently, to effectively implement e-commerce tax, especially cross-border e-commerce tax, the Tax authority bases its method on two flows of goods – including goods from Vietnam to abroad and from abroad into Vietnam. For each flow, the Tax authority will apply tax measures, as well as tax administration for these activities.

According to Mr.Luu Duc Huy, Director of the Policy Department under the General Department of Taxation, for the provision of goods and services of organizations and individuals from Vietnam to foreign countries, subjects that are registered businesses and declared and implemented tax payment in Vietnam will comply with regulations as normal organizations and individuals under the current Tax Administration Law and coming Tax Administration Law 2019.

"Regarding the tax management for the provision of goods and services from abroad to Vietnam, currently the Law on Tax Administration 2019 has provided specific provisions for this activity. The provision of services from abroad to Vietnam is not subject to the supervision of the Customs authorities, but is subject to the supervision and management of the Tax authorities, which are also subject to taxes such as Value Added Tax, Corporate Income Tax, and Personal Income Tax,”Huy said.

Currently, the Ministry of Finance has assigned the General Department of Customs to develop a tax administration scheme for e-commerce activities of import and export goods, including regulations to restrict firms taking advantage of current policies to bring goods into Vietnam, reducing tax obligations (exempt from goods, gifts, and personal effects).

Foreign service providers may declare and pay taxes online

In order to manage e-commerce taxes, especially direct taxes for foreigncross-border service providerswithout a permanent establishment in Vietnam, must directly pay, register and declare taxes and authorize organizations and individuals in Vietnam to register and declare and pay tax in Vietnam.

“In order to create favourable conditions for overseas organizations and individuals that provide services to Vietnam in registering, declaring and paying taxes, the General Department of Taxation has researched and developed this registration to the portal of General Department of Taxation," Huy said.

Also according to the Director of Tax Policy Department, recently, the National Assembly has approved the Law on Cyber ​​Security, which stipulates that e-commerce business organizations must store data in Vietnam and establish branches and offices in Vietnam.The tax authority will base on that to request organizations to register, declare and pay taxes as prescribed. Therefore, the Tax authority encourages overseas service providers to register, declare and pay taxes in Vietnam so that the tax deduction method at source shall not be applied. Currently, the General Department of Taxation has also worked with many large businesses, such as Netflix, and requested them to register, declare and pay taxes in accordance with Vietnamese regulations.

If the foreign service provider does not register, declare and pay taxes in Vietnam, the tax authority will apply the tax deduction method at source. When applying this provision, there are two types: institutional buyers and individual buyers. For institutional buyers, they will comply with provisions in Circular 103/2014/ TT-BTC. For individual buyers, the Tax authority will manage cash flows of these individuals.

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To do this, Clause 3, Article 27 of the Tax Administration Law 2019 stipulates that commercial banks must deduct taxes and represent overseas organisations and individuals engaged in e-commerce business activities with income from Vietnam to pay tax liabilities in accordance with provisions of the Tax law.

Huy also said that to strictly control the E-commerce tax, the General Department of Taxation will work closely with the State Bank and commercial banks to identify the criteria, thereby instructing commercial banks to deduct taxes in accordance with tax laws for cross-border transactions.