Vietnam vows to collect tax from cross-border services

Kuek Yu Chuang, CEO of Netflix Asia Pacific, had a working session with the Minister of Information and Communication Nguyen Manh Hung some days ago.

At the working session, the representative from Netflix expressed willingness to make a long-term investment in Vietnam and committed to pay tax as stipulated by the laws.

The CEO made such a commitment after Hung, speaking at important events held recently, repeatedly emphasized that Vietnam is a sovereign country, and all foreign companies doing business in Vietnam must comply with Vietnamese laws.

The compliance is understood as observance in both content censorship and duty obligation fulfillment.

Hung said Vietnam will use legal, economic and technological to force across-border platforms to comply with Vietnamese laws.

As such, Vietnam’s agencies have shown their strong determination to collect tax from the services provided across border, which they could not do in the past.

According to Luu Duc Huy, director of the Policy Department of the General Department of Taxation (GDT), overseas service providers which don’t have permanent residence in Vietnam have obligations of coming directly to taxation agencies or authorizing third parties to register, declare tax and pay tax in Vietnam.

If foreign firms providing services across the border don’t have commercial presence in Vietnam and don’t declare tax, taxation agencies will apply the method of withholding tax at source.

However, Huy admitted that collecting tax from the subjects is not easy. The taxation body is working with the State Bank of Vietnam and commercial banks on the steps to withhold tax.

Besides Netflix, Tencent and Baidu are also providing online movie service in Vietnam. Tencent provides tens of thousands of moves via We TV, and Baidu via IQiYi. There are also Apple TV’s services. The services are provided to Vietnamese users and fees are in Vietnam dong.

Currently, pay-TV service providers in Vietnam are covered by Decree No 06/2016, but the decree lacks provisions related to the providing of TV services across the border. Therefore, the Ministry of Information and Communication is amending the decree.

Vietnamese service providers complain about the unfair management policy. Chair of the Vietnam pay-TV Association Tran Van Uy said while Vietnamese firms have to observe strict regulations and pay tax, foreigners don’t have to.

Foreign TV programs have ads, but Vietnam cannot collect any dong in tax from the ads.