Ministries disagree on solutions to collect tax from Google, Facebook

Ministries disagree on solutions to collect tax from Google, Facebook

MOF has vowed to collect tax from Google’s and Facebook’s earnings in Vietnam, and is drafting a regulation on tax management over e-commerce activities.

Under the draft regulation, cross-border services must make payments via the national payment portal NAPAS. This will allow taxation agencies to control revenue from services to collect taxes.

The tax payments will be carried out under the withholding mode. Tax amounts will be deducted from revenue when making payments via NAPAS.

SBV’s Governor Le Minh Hung said MOF has the legal right to issue regulations, guide tax declarations, and report and collect tax. SBV doesn’t have the right or skills in this field.

Under current laws, credit institutions can deduct customers’ money only if they have consent from customers or receive instructions from agencies, he said.

MOF needs to release legal documents with detailed guidance on the issue, he added.

Lawyer Truong Thanh Duc believes that MOF’s idea is a good solution allowing it to collect tax from Facebook and Google, which remains an impossible mission at this time.

However, Duc said that MOF would try to differentiate the nature of payment transactions via banks.

However, Duc said that MOF would try to differentiate the nature of payment transactions via banks.

In many cases, payments are made for goods purchases, not for ads on Google and Facebook. If the nature of the transactions cannot be clarified, this will lead to overlapping taxation.

Lawyer Tran Xoa from Minh Dang Quang Law Firm, said that it is not feasible to ask banks to deduct money from customers’ accounts when making cross-border transactions.

If remitting money via banks, individuals will have to prove the legal purposes of the transactions. But internet banking remittances via cards to pay for goods and services have no limit.

No official report about the amount of taxes that Google and Facebook have evaded in Vietnam exists, but experts say it is huge.

Deputy PM Vu Duc Dam cited official reports as saying that 67 percent of Vietnamese use the internet, with 60 percent using social networks.

Foreign social networks account for 95 percent of market share, search engines 98 percent and e-commerce 80 percent.

The revenue from ads that foreign companies, especially Facebook and YouTube, can collect is estimated to amount to 80 percent of total revenue. In 2017, they earned $320 million from the service.