Facebook and Google dodging Vietnamese taxmen since 2016

Facebook and Google have been operating without paying a single dong of tax in Vietnam

Over the past two years, the Vietnam-based partners of the two social media giants have been paying VND120 billion ($5.25 million) in total corporate income tax (CIT) on their behalf.

Specifically, as shown in a recent report provided by the Ministry of Finance (MoF), the Vietnamese tax authorities could only administer tax regulations on the income generated by their partners, advertising agencies, as well as businesses who directly purchased Facebook and Google’s services in Vietnam.

Previously in 2017, the domestic partners of Facebook and Google were reported to pay a total VND73.2 billion ($3.2 million) of tax, VND39.1 billion ($1.71 million) of which was value added tax (VAT) and VND34.1 billion ($1.49 million) CIT.

In 2016, according to statistics provided by MoF, the partners of the two social media giants paid a total of VND46.9 billion ($2.05 million) worth of tax, of which VND25.3 billion ($1.1 million) VAT and VND21.6 billion ($946,080) CIT.

Apart from the tax collection mishap, the matter of national security in the digital age was also brought up in Vietnam’s cybersecurity bills as well as a recent bill drafted in June 2017. In particular, this bill proposed a practice called 'data localisation' which entailed all foreign online service providers (including Facebook, Google, and Twitter) to store the data of Vietnamese users’ exclusively in Vietnamese data centres.

However, despite raising concerns among Vietnam-based businesses who directly engaged in the digital industry, this proposal failed to make the final cut in the revised cybersecurity bill.

Nonetheless, the cybersecurity bill reaffirmed the initial request by MoPS, stating all foreign online service providers must set up representative offices in Vietnam in order to comply with their tax obligations in the country.

According to statistics provided by MoPS, up until January 2018, Google rented roughly 1,800 server along with Facebook’s 441, which were previously acquired from companies engaged in data storage in Vietnam.