City officials seek tax on sales via Facebook
City officials seek tax on sales via Facebook
HCM City officials are seeking ways to collect taxes from small- and home-based business owners who are selling merchandise on social media, such as Facebook, in a bid to reduce tax losses in the municipal budget.
At a meeting between city’s leaders and the HCM City Taxation Department, authorities said that the sector had been unable to collect taxes from a number of emerging platforms, including online businesses, which indicated that State management had not caught up with the development of the economy.
Pham Thanh Kien, director of HCM City Department of Trade and Industry, said e-commerce activity had been booming, with 80,000 active websites in the city, half of which run stable operations, but tax collection in the field was very poor, especially sales activities through Facebook.
He suggested that the HCM City People’s Committee worked directly with Facebook to manage the source of revenue.
The HCM City Taxation Department should co-operate with commercial banks to check accounts of organisations and individuals who are doing business on Facebook, because “Facebook traders” have to register bank accounts for transactions.
In fact, in 2015, revenue from e-commerce in Viet Nam reached US$4.1 billion, an increase of five times compared with 2012. It is expected to reach $10 billion by 2020, accounting for 5 per cent of total retail sales in the country. Therefore, e-commerce will play a significant role in the Vietnamese retail sector in the future.
Bui Quang Tin, a lecturer in business administration at HCM City University of Banking, said that currently the Ministry of Industry and Trade’s Circular No 47/2014/TT-BCT and Government Decree No 52/2013/ND-CP are documents that regulate trading activities on e-commerce platforms. However, only social networks that register operations in Viet Nam are subject to Decree 52 and Circular 47.
Tin said that only foreign traders and organisations and owners of social networking sites who had presence in Viet Nam, such as having a representative office or a branch operating in Viet Nam, or set up the website under Viet Nam’s domain name with “.vn”, are subject to the above documents.
Therefore, to obtain sales tax from sellers on Facebook, Vietnamese authorities should work with Facebook so they will have a legal presence in Viet Nam.
Economist Nguyen Tri Hieu said that in developed countries, all people and organistions were required to declare income and pay taxes. Collecting taxes on sales through social networks was necessary, he said.
He suggested that only those whose revenue was more than VND100 million ($4,386) per year be taxed.
He noted that transactions on the Internet were difficult to control and collecting taxes should be done step by step. Initially, there should be requirements that all individuals conducting business via Facebook must register their operations and declare their income.
Bui Quang Tin also said that with millions of Facebook accounts, in the first phase, the tax authority should target large and professional businesses, because many individual dealers operated as side jobs, or even seasonal businesses. If it tried to control all of them, it would use significant resources and probably be inefficient.
The difficulty in managing online sellers and collecting taxes is said to be the consequence of the low rate of non-cash transactions in Viet Nam.
Nguyen Hong, a food businessman on social networks, told Tuoi Tre (Young) newspaper that, in reality, it was hard for him to pay taxes because, “I have no idea of where to register my business and how to pay taxes”.
“When I came to the district-level economic management unit to ask to register to pay taxes, they said that they did not manage online businesses. They told me to seek information from the municipal level.”
An official of the Ministry of Finance, quoted by Tuoi Tre newspaper, said that the ministry had asked the General Taxation Department to issue guidance on collecting taxes from online businesses.
For professional businesses, the Internet was one of the channels to sell products, and they still had to declare tax and pay tax. Thus, there was no loss of tax revenues, he said.
However, it is difficult to tax individuals, because not all of them have tax file numbers.
