Tax evasion tactics and risks

According to current regulations, individuals or households with annual revenue under 100 million VND (approximately $4,200) are exempt from paying taxes.

However, cases have been reported where online sellers on e-commerce platforms (ECPs) use relatives' bank accounts to receive payments. When the revenue approaches 99 million VND, they switch accounts to avoid crossing the taxable threshold.

At a recent online workshop titled “E-commerce taxation: Optimizing tax costs, ensuring compliance, and anticipating government policies,” Trinh Hong Khanh, Director of Ba Mien Tax Company, likened such schemes to the "cicada shedding its skin."

Khanh emphasized that this approach is risky and unlikely to escape the scrutiny of tax authorities. Even if sellers avoid bank accounts and rely on cash-on-delivery (COD) payments, tax authorities can still track their activities using synchronized data from ECPs.

He advised online sellers to pay taxes accurately to avoid tax recovery and hefty fines for tax evasion.

Unified taxation of e-commerce sellers

Hoang Thi Tra Huong, Director of FPT Zbiz Consulting, explained that ECPs now associate individual shops with a single ID (citizen identification number), linking multiple shops to the same owner.

Taxable income is calculated based on the shop’s total revenue across all platforms, irrespective of the payment method or account used.

“If the revenue exceeds the tax-exempt threshold and taxes are not declared, authorities will recover the evaded taxes,” Huong warned.

Phan Tuan Nam, co-founder of Webketoan Academy, detailed the financial consequences for sellers caught using the "cicada shedding its skin" tactic.

For example, if a shop generates 99 million VND in undeclared revenue, the tax authorities will calculate and recover taxes based on the entire revenue. Additionally, the undeclared amount will be added to the shop's total revenue, potentially leading to double taxation.

Evasion also results in fines ranging from two to three times the unpaid tax amount. In total, offenders may end up paying four times the evaded tax.

Nam stressed, “Tax authorities now operate with high professionalism. Online sellers must comply with the law and be transparent.”

Guidance for late tax declarations

A seller generating 2 billion VND (approximately $84,000) in revenue on TikTok in 2023 expressed concerns about late tax declarations.

Nam explained that although penalties for late declarations are inevitable, they are less severe than evasion penalties.

For commercial activities, the VAT rate is 1%, and the personal income tax rate is 0.5%. For 2 billion VND in revenue, the total tax amounts to approximately 20 million VND (about $840). A late payment fee of 0.03% per day is applied to calculate the final amount due.

Nam advised online sellers to organize monthly revenue records, register as a business, and obtain a tax code to declare taxes. Voluntary compliance typically results in penalties for late payment rather than evasion.

New regulations on tax collection from e-commerce platforms

Under the revised Tax Administration Law, effective April 1, 2025, ECPs will withhold and remit taxes on behalf of sellers.

Taxes will be deducted based on the actual revenue from orders processed on the platform. Sellers will no longer need to declare their taxable revenue for platform transactions.

This centralized approach ensures transparency and simplifies compliance for e-commerce businesses, as tax authorities will have access to sellers’ total revenue data.

Binh Minh