Fairness the goal in new e-commerce tax regulations
Fairness the goal in new e-commerce tax regulations
Tax requirements for individuals and corporations will be handled by both domestic and international e-commerce platforms in order to avoid tax loss.
Under the revised Tax Administration Law, which was adopted last month and will become effective on January 1, both domestic and foreign e-commerce platforms and digital service providers must deduct and pay taxes on behalf of their sellers and declare the deducted amounts.
Fairness the goal in new e-commerce tax regulations, photo: freepik.com |
Current regulations only require domestic platforms to be responsible for providing information on organisations and individuals doing business through the platform. However, the information provided by the platforms is not complete and not close to the actual situation, according to the Ministry of Finance (MoF).
Similarly, the current law applies the same regulations as for traditional business households and individuals carrying out e-commerce activities. Therefore, tightening tax obligations for such platforms to deduct and pay taxes on behalf of, and declare the deducted amount for sellers, is deemed necessary.
Nguyen Duc Nghia, deputy director of the Centre for Supporting Small and Medium Enterprises, agreed that the new regulation would create fairness and avoid tax losses. Because e-commerce platforms currently collect money on behalf of sellers, they can gain revenues, but with the form of renting the platform, the seller will have to directly declare taxes.
“The platform declaring and paying taxes on behalf of the seller is suitable. Sometimes the seller makes purchases and sales in a short time, does not have enough conditions to declare, and does not understand taxes enough to declare. Meanwhile, the platform is often an organised enterprise, and has the technology and knowledge to declare and pay taxes for the seller,’ he said.
The MoF acknowledged that the regulation may cause e-commerce platforms to incur additional costs to upgrade the system to ensure the determination of deductible and paid taxes by individuals and business households on the platform.
However, there will be no or insignificant costs to hire additional tax personnel and customer care personnel to handle tax complaints, it said.
To support platforms, the MoF has directed the General Department of Taxation (GDT) to discuss plans to update the systems of e-commerce platforms and tax authorities to meet the requirements of deductible and paid taxes electronically, ensuring to minimise costs and clearly defining the responsibilities of business households and individuals on the platforms.
According to the GDT, in the first 10 months of 2024, the amount of tax paid by organisations and individuals with e-commerce business activities was about $3.94 billion, an increase of 17 per cent compared to the average tax amount in the first 10 months of 2023. The e-commerce information portal has recorded 412 trading platforms providing information, believed to be a modest number.
It is estimated that 191,000 organisations and individuals are doing business in Vietnam. According to the online retail market overview report for Q3 of the Metric e-commerce data platform, the total transaction volume of the first nine months hit $9.5 billion, an increase of 37.66 per cent compared to the same period in 2023. Transaction volume on the five platforms of Shopee, TikTok Shop, Lazada, Tiki, and Sendo reached an average of around $1.05 billion per month.
