Feedback given on e-commerce taxation draft
Feedback given on e-commerce taxation draft
The proposed regulations that require e-commerce platforms to pay tax on behalf of individual sellers are at odds with other regulations on personal income, leading to double taxation and asymmetric effects on e-commerce actors.
This was the feedback of the Vietnam Chamber of Commerce and Industry (VCCI) on a draft amending Decree 126 on taxation and Decree 123 on invoices and bills.
The VCCI has rejected the regulations, citing Article 24 of the Law on Personal Income Tax, which stipulates that individuals who have taxable incomes must make tax declarations, pay tax into the State budget and make tax finalisation for all their income.
Article 29 of Decree 65 on personal income tax was also invoked to show that resident individuals must declare and pay income tax on business activities directly to tax offices.
Accordingly, the chamber urged lawmakers to clarify the inconsistency between the proposed regulations and existing legal documents to clear up confusion.
VCCI also believed the regulations that require e-commerce platforms to act as tax representatives of sellers are ambiguous since the regulations do not define the basis from which representative rights are established and the scope of responsibility.
The chamber was concerned that collecting the tax would double tax individuals who conduct online and brick-and-mortar businesses.
This could be the case because online incomes would be deducted for tax by e-commerce platforms, whereas tax authorities collect offline incomes on a presumptive basis.
“Unfortunately, it is quite difficult to separate online incomes and offline incomes of a single business location, raising a possibility that the individuals are double-taxed,” the VCCI explained.
VCCI also believed the draft would produce asymmetric effects on e-commerce actors as it shifts the burden of tax declaration and tax payment from sellers to e-commerce platforms.
Meanwhile, social network sites do not have to bear such a burden because they fall outside the scope of the draft, putting them at an advantage.
The VCCI finally suggested the draft apply to cross-border e-commerce platforms as much as domestic platforms to create a level playing field for all e-commerce actors.
