Vietnam: E-commerce and digital-based enterprise taxes guidelines

Vietnam: E-commerce and digital-based enterprise taxes guidelines

Consumers are becoming increasingly reliant on e-commerce due to Covid-19 period. According to the E-Economy SEA 2018 report, Vietnam boasts one of the digital economies with the most rapid growth rates, posting an increase of 25-30% per annum. In 2025, its digital economy will be worth US$33 billion, 3.7 times that of 2018.

However, as this trend is on the rise, failing to collect tax from cross-border digital service providers might result in huge tax losses. To combat this issue, on November 12th, 2021, the Vietnam Ministry of Finance (MOF) just issued Decision No.2146/QD-BTC on the promulgation of the master plan for the implementation of the solutions in the project “Tax management for E-commerce and digital-based business in Vietnam”. 

In this client alert, we summarize below the salient points under Decision No.2146/QD-BTC that may affect your business. Decision No.2146/QD-BTC will take effect from 1 January 2022. The Decision has resulted in the following legal updates:

  • As from January 1st, 2022, there will be regulations applied to the foreign suppliers who have no permanent establishment (PE) in Vietnam regarding tax registration, declaration, and payment
  • Tax registration, declaration, and payment of overseas suppliers without having a permanent establishment in Vietnam will be processed on an electronic portal of the General Department of Taxation (GDT).
  • The competent tax department shall perform inspections to the enterprises operating in e-commerce business activities.
  • Before 2024, the Law on Tax Administration may be amended and supplemented including:

(i) The owners of the e-commerce trading platform are obliged to conduct tax deduction, declaration, and payment for the individuals having business operations via such platform. 

(ii) The foreign suppliers who have no permanent business representatives in Vietnam, before making payment to Vietnamese individuals (cash flow into Vietnam), shall make tax deduction and tax declaration directly with tax authorities via the online portal. 

(iii) The commercial banks and payment intermediaries, based on the amount paid from offshore to the individuals’ accounts, shall deduct, declare, and pay tax on behalf of such domestic individuals if the payment is received on the ground of business activities.

  • Decree No. 52/2013/ND-CP and Decree No. 85/2021/ND-CP regulating e-commerce business  planned to be amended and supplemented as follows:

(i) The enterprises that are owners of e-commerce trading platform shall connect and provide electronic information information the tax authorities to comply with the  tax administration;

(ii) The registration of business activities of entities and individuals on the e-commerce trading platforms is required to be accompanied by tax code and the the business registration certificate;

(iii) The enterprise and individuals operating business on e-commerce trading platforms must provide information at the request of tax authorities to comply with the tax administration.

  • There is a plan to develop a legal framework regulating cryptocurrency following international practice. Currently, Vietnam solely has a general policy on blockchain research and application. Cryptocurrency is not considered an asset nor a means of payment. However, through this decision, there is a huge possibility of recognizing cryptocurrency as an asset

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If you need any assistance with these or any other matters relevant for international investors in Vietnam, our experts are ready to work with your company to ensure you understand how the above will apply to your specific situation in Vietnam. Contact our teams for expert support and further information on managing corporate compliance in Vietnam.

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