The Ministry of Finance (MoF) on September 12 submitted to the government a report on amending and supplementing a number of articles of Decree No.126/2020/ND-CP, including regulations that e-commerce platforms are responsible for declaring and paying tax on behalf of their business and individual clients.
With this adjustment, administrative procedures for tax authorities and taxpayers would be reduced, since tax authorities would receive tax declarations and payments from e-commerce platforms only, instead of tens of thousands of individuals.
In addition, these platforms are responsible for providing tax authorities with information on organisations and individuals that conduct part of or the whole process of buying and selling goods and services. This information includes the sellers’ names, tax identification numbers, personal identification numbers, addresses; phone numbers and sales revenues.
According to Nguyen Thi Lan Anh, director of Tax Administration for Small- and Medium-Sized Enterprises and Household Businesses, at the General Department of Taxation (GDT), this is the optimal solution to improve tax management efficiency and avoid tax evasion and tax fraud.
“This adjustment is not contrary to current regulations in tax laws. As all buying and selling activities are done through e-commerce platforms, it can be understood that they play a decisive role in each transaction,” Anh explained.
“Decree 126 already specified that companies can declare and pay taxes on behalf of an individual participating in a business cooperation contract. In addition, the responsibilities of e-commerce platforms are also strengthened through Decree No.85/2020/ND-CP, including providing accurate and complete information about goods and services sold on the platform in cases of violation, representing foreign sellers in complaints settling and tax obligations,” she continued.
At a conference on data provision of e-commerce platforms held by the GDT on September 22, the department said it is in the process of consulting the Vietnam E-Commerce Association and various related platforms about collecting information on organisations and individuals trading goods and services through e-commerce.
Thereby, by November, an e-commerce tax portal will be put into operation, with the testing phase taking place during October 11-21.
“The GDT is upgrading the electronic tax system, including the addition of an e-commerce portal to meet the requirements of data provision,” a GDT representative said. “Specifically, e-commerce platforms would use the e-tax account granted on the GDT’s website to provide information. If a platform declares and pays taxes on behalf of businesses or individuals, the declaration and payment shall be made according to the instructions. Once the e-commerce group has provided information electronically to the GDT, they would not have to provide information to each local tax authority.”
In addition, the portal would also collect information about organisations and individuals in cases where the e-commerce platforms have not yet carried out tax declarations on behalf of the individual. The provision of this information is done quarterly or at the request of the tax office.
The MoF also noted that while e-commerce websites may or may not have an online ordering function, only e-commerce platforms with the function of online ordering, including Shopee, Lazada, Tiki, Sendo and the likes, are subject to this new adjustment. Exchanges such as Chotot and Batdongsan.com do not have to fulfil the above tax obligation, as they do not directly participate in trading transactions but only offer a display of goods and services.
The general consensus amongst experts is that tax administration for e-commerce activities has seen many positive changes in recent years.
“The legal corridor for tax administration for e-commerce has been basically completed, creating a solid foundation,” assessed Dr. Le Xuan Truong, head of Taxation and Customs at the Academy of Finance (AoF). “However, with the fast-moving pace of technology, there have been legal gaps that need to be adjusted and supplemented. The promulgated decree is expected to create favourable conditions in line with global practices.”
Dr. Pham Ngoc Dung, former head of Public Finance at the AoF, added that tax administration for business activities on a cross-border basis needs further regulations.
“Some foreign-invested enterprises that do not have a representative legal entity in Vietnam do not conduct business registration, so it is difficult for state agencies to track, manage, and identify their tax obligations,” Dung noted. “Moreover, some of these models are not yet on the list of existing business lines, operating on a cross-border platform, leading to difficulties in determining the nature of the business lines and tax rates.”
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The fast-growing e-commerce sector is making big money but its tax payments are not commensurate with its revenues, exposing the need for a better tax policy to prevent losses, according to insiders.