E-commerce platforms to be connected with tax agencies from next year

E-commerce platforms to be connected with tax agencies from next year

Hanoi - E-commerce platforms must be electronically connected with tax management agencies from the beginning of next year, not from next month, as the tax watchdog aims to better collect taxes from sellers operating on the platforms.

The deadline delay was part of a roadmap recently issued by the General Department of Taxation to implement Circular No 40/2021/TT-BTC issued on June 1 and taking effect from the beginning of August about value-added tax, personal income tax and tax management of individual sellers.

Under the circular, e-commerce platforms would be responsible for sellers' tax declarations and payments, provisions that have received complaints about their reasonableness and consistency with established tax regulations.

The circular also dictated that e-commerce platforms must provide information on sellers, including revenue, banking accounts and products, to tax management agencies to aid tax collection.

Some have complained that this regulation would cause great difficulties for e-commerce platforms.

According to the Vietnam e-Commerce Association, e-commerce platforms only provide technology infrastructure to connect sellers and buyers and help them conduct transactions. E-commerce platforms do not pay the sellers, meaning e-commerce platforms are not responsible for declaring and paying taxes on behalf of the sellers.

Some regulations were infeasible and could have large impacts on e-commerce platforms and thousands of sellers, the association said.

Dau Anh Tuan, head of the legal department under the Vietnam Chamber of Commerce and Industry, said the regulation could be a burden on the rapidly-developing e-commerce sector with huge potential in Vietnam.

Implementing this regulation would increase costs for e-commerce platforms, Tuan said.

He said that under the Law on Personal Income Tax, organisations and individuals were responsible for declaring and paying their own taxes. Asking e-commerce platforms to declare and pay taxes on behalf of the sellers could be inconsistent, he said.

Vietnam's e-commerce market is developing rapidly and grew by 15 percent in 2020 to a value of 3.2 billion USD, the highest in Southeast Asia.

The COVID-19 pandemic has provided a golden opportunity for e-commerce platform development, however, many organisations and individuals have not fulfilled their tax obligations despite their huge online revenue.

In response to the complaints, the General Department of Taxation said that the regulation would be implemented following a roadmap, not from the beginning of August when the circular came into force.

From now to August 1, the General Department of Taxation will work with the Ministry of Industry and Trade to survey several e-commerce platforms to prepare a data format and collect opinions from e-commerce platforms.

From August 1 to October 1, the General Department of Taxation will propose a standard data format for information connectivity.

From October 1, 2021, to January 1, 2022, the General Department of Taxation and e-commerce platforms will carry out upgrades to ensure smooth electronic information connectivity.

From the beginning of next year, e-commerce platforms will be electronically connected with tax management agencies.