Proposals must aid e-commerce tax management

Proposals must aid e-commerce tax management, Source: freepik.com

Last month, the Ministry of Finance (MoF) proposed amendments to the current Tax Management Law to enable e-commerce platforms to declare and pay taxes on behalf of businesses and individuals operating through them. The intention is to simplify administrative procedures, centralise tax declarations, and better accommodate the unique nature of e-commerce, while also expanding the tax base and fostering economic growth.

Deputy general director of the General Department of Taxation (GDT), Dang Ngoc Minh, at a tax conference in late September said, “This is a solution designed to strengthen tax management efficiency, especially in the context of the rapid expansion of the digital economy and e-commerce sectors.”

Minh further clarified that not only businesses but also state agencies, including banks, the police, and the Ministry of Industry and Trade, are collaborating with tax authorities to ensure effective tax management by providing relevant data. “The requirement for e-commerce platforms to report seller information is already in place, and these amendments simply extend this to include tax declaration and payment on behalf of the sellers,” he said.

Minh highlighted that this concept is not new, as foreign suppliers without a physical presence in Vietnam are already required to declare and pay taxes through the Foreign Supplier Portal. As of mid-August, 108 foreign providers, including Google and Facebook, had collectively paid over $249 million in taxes – a 24 per cent increase compared to the previous year.

“To ensure fairness, the same requirement should apply to domestic enterprises. If foreign providers can comply, there is no reason why domestic e-commerce platforms cannot handle tax declarations and payments on behalf of their sellers,” Minh added, noting that domestic platforms are fully capable of implementing this process.

Following consultations with local e-commerce platforms, Minh noted that their executives had stated that they would be able to manage tax declarations and payments on behalf of individual sellers if the policy were introduced.

Deputy Minister of Finance, Nguyen Duc Chi, acknowledged the rapid growth of e-commerce and emphasised that adapting tax management practices is a natural progression. “New proposals often generate different perspectives, but all recommendations will be carefully considered. The MoF remains open to feedback from businesses to ensure appropriate adjustments are made,” he said.

However, the Vietnam E-commerce Association (VECOM) has voiced its opposition to the proposed amendments, recommending the removal of certain provisions. It argues that the responsibility for tax declaration and payment is a fundamental right and duty of each taxpayer and should not be transferred to another entity, as outlined in the draft amendment to Article 42.

“Obliging e-commerce platforms to declare and pay taxes on behalf of sellers contradicts Article 24 of the Personal Income Tax Law and Article 4 of the VAT law. Additionally, such regulations are not found in neighbouring countries or major global economies. Countries like Thailand, Indonesia, Singapore, Malaysia, the Philippines, China, and the US do not require e-commerce platforms to declare and pay taxes, particularly personal income taxes, on behalf of sellers,” it said.

This falls outside the core expertise and operational focus of e-commerce platforms, creating an enormous operational burden, the VECOM said, adding that such obligations would force platforms to divert significant resources to tax-related activities, which are beyond their primary business functions. They also highlighted the need for platforms to establish dedicated customer service teams to handle tax-related queries, detracting from their core operations.

Le Quang Manh, Chairman of the National Assembly’s Finance and Budget Committee, pointed out that most foreign providers operate from countries with double taxation avoidance agreements with Vietnam. These agreements stipulate that Vietnam can only impose taxes on the income of foreign companies if they have a permanent establishment in the country.

“The drafting body must clarify the effectiveness of these regulations and consider additional policy measures,” Manh said. “This is crucial to ensure the proper collection of taxes from foreign providers operating through e-commerce platforms.”

By the end of August, the GDT reported that over 400 e-commerce platforms had registered their information on the E-commerce Information Portal, marking an increase of 43 platforms since the end of 2023. Currently, tax authorities manage around $71 billion in revenue from organisations and individuals involved in e-commerce activities, with approximately $3.12 billion in taxes collected – reflecting a 38 per cent increase compared to the same period last year.

The tasks to tackle in global e-commerce In recent years, e-commerce generally and particularly in Vietnam has developed at a very fast pace and become an irreversible trend. According to reliable analysis, the global e-commerce market could reach $7.4 trillion of revenue in 2025, of which online sales account for 24.5 per cent of the total sales revenue of the entire retail industry.

New proposal requires e-commerce platforms to pay taxes of sellers A proposed revision to the tax law would obligate e-commerce platforms to declare and pay taxes on behalf of sellers, aiming to enhance tax management amid the rapid growth of the digital economy.

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