Although selling to the domestic market, foreign e-commerce platforms do not have permanent establishments in Vietnam, making tax management difficult.
Recently, the media has strongly reflected on the unfair competition of the floor. e-commerce Temu in the Vietnamese market when operating without a license, selling aggressively and competing unfairly with domestic enterprises.
Right away, Ministry of Industry and Trade - The competent authority in the field of e-commerce has responded promptly, directing units under the Ministry to review and strengthen state management of e-commerce.
In particular, the Department of E-commerce and Digital Economy is assigned to preside over and coordinate with relevant agencies and units to strengthen communication and guide consumers to be cautious when shopping online on cross-border e-commerce platforms in general and Temu... in particular. In particular, absolutely do not conduct transactions with platforms that have not been confirmed by the Ministry of Industry and Trade to register at the e-commerce management information portal.
Not to mention the consequences of unfair competition, or the unregistered operations of Temu or other trading floors, tax management alone for these floors is considered very difficult.
At the Workshop to collect business opinions on the Draft Law amending 7 laws of the Ministry of Finance organized by the Vietnam Chamber of Commerce and Industry in mid-October, many experts as well as tax consulting units spoke out about this.
From a research perspective, Mr. Ngo Vinh Bach Duong - Director of the Legal Consulting Center, Institute of State and Law - highlighted the concept of indirect tax (VAT) for foreign sellers when their goods and services are consumed/consumed in a country.
“ It is not difficult to recognize international booths on major e-commerce trading floors such as Shopee, Tik Tok, Tiki... According to international practice, these are the subjects that need to be concerned about considering the collection at source of indirect taxes from goods and services delivered to and consumed in Vietnam, ” said Mr. Bach Duong.
Therefore, to effectively manage taxes for e-commerce platforms without a permanent establishment in Vietnam, Mr. Bach Duong said that tax policies need to clarify tax obligations for foreign sellers on Vietnamese e-commerce platforms and e-commerce platforms without a permanent establishment in Vietnam but selling goods and the Vietnamese market.
From the perspective of a tax consultancy unit, Mr. Bui Ngoc Tuan - Deputy General Director of Tax Consulting - Deloite Vietnam Tax Consulting Co., Ltd. - commented that the Draft Law amending 7 laws of the Ministry of Finance proposes to require foreign suppliers with income arising from e-commerce business activities and digital platform business in Vietnam to directly register for tax, declare, calculate and pay taxes in Vietnam or authorize a third party to perform these obligations. At the same time, the Draft Law also amends the definition of taxpayers in Vietnam to include foreign enterprises without permanent establishments in Vietnam.
According to a representative of Deloite, the introduction of this regulation may lead to some difficulties in implementation and may cause controversy. First of all, the taxation of foreign enterprises without a permanent establishment in Vietnam, but having income from e-business services and digital platforms in Vietnam, may not be consistent with international principles and practices, as well as the Double Taxation Agreements (DTAs) that Vietnam has signed.
“ We need to clarify the legal basis and methods for determining income from these activities, and consider Vietnam’s international commitments on double taxation, to ensure that we do not violate the basic principles of the DTA. Understanding these international agreements is very important to avoid disputes or incorrect application of tax policies, which negatively affect relations with partner countries and international businesses, ” Mr. Bui Ngoc Tuan suggested.
The methods of tax management for foreign e-commerce platforms selling goods to Vietnam have been and are being implemented by the authorities. However, full compliance with regulations, tax obligations and ensuring product quality are prerequisites to ensure consumer rights and fair competition.
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