Tax collections from cross-border e-commerce platforms and services have improved recently. However, the taxation body still thinks the collections are too modest compared with the scale of the business operations of the platforms in Vietnam.

Dang Ngoc Minh, deputy general director of the General Department of Taxation (GDT), reported that VND700-800 billion worth of tax from e-commerce platforms and digital services were collected in 2018. The figure rose to VND1 trillion in 2019. In the first 11 months of 2020, the figure was approximately VND1 trillion. Taxation agencies collected tax based on the declarations by businesses.

The collections were believed to be much lower than the amounts of taxes Vietnam should have collected, because not all business activities could be covered, especially individuals’ transactions.

Minh said it is necessary to strengthen control over cross-border transactions in the time to come.

GDT said it is now able to control payments abroad from Vietnam’s businesses, but admitted that it is difficult to control individuals’ transactions on cross-border digital platforms. These include payments by individuals and households for Netflix’s services.

Ministries and branches are joining forces to ask the platforms to declare and pay tax and control the cash flow for payments. This will be implemented starting December 5, when Decree 126 takes effect.

Under the decree, commercial banks will also have the responsibility of withholding and paying tax on behalf of foreign suppliers who don’t have permanent residence in Vietnam, but have e-commerce operations and business on digital platforms with organizations and individuals in Vietnam.

If foreign suppliers do not register, declare and pay tax, commercial banks and institutions that provide intermediary payment services will deduct money and fulfil tax obligations in accordance with the laws for products and services that individual buyers pay to overseas suppliers related to e-commerce and business on digital platforms.

This means that cross-border e-commerce platforms and digital services such as Netflix, Facebook and Google have the responsibility of authorizing tax declarations and payments in accordance with the law.

If cross-border service providers have filed tax registration in Vietnam, they will declare and pay tax themselves. If they don’t register, the tax payment will be implemented under the withholding principle.

Dang Ngoc Minh, deputy general director of GDT, said the taxation body is going to work with consultancy and auditing firms to invite YouTube, Amazon, Google and Netflix to work with the agency on the new tax duties.

“In principle, tax obligations must be fulfilled. The responsibility of enterprises is to pay corporate income tax and VAT for services which arise from cross-border transactions with Vietnam,” he said. 

Hai Dang

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