The Ministry of Finance has advised the Government and submitted to the Prime Minister amendments and supplements to regulations on tax management, including proposing that e-commerce trading floors are responsible for declaring and paying taxes on behalf of organizations, individuals, and business households on the floor (sellers).

In a recent dispatch sent to the National Assembly's Finance and Budget Committee, the Vietnam E-commerce Association (VECOM) proposed to abolish this content.

Speaking with PV. VietNamNet, Mr. Tran Van Trong, General Secretary of VECOM, explained more clearly why the association reacted like that.

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Mr. Tran Van Trong, General Secretary of VECOM. Photo: NVCC

- Recently, a Director of the General Department of Taxation said that the regulation on e-commerce platforms declaring taxes on behalf of individuals/business households has been studied and applied based on international experience such as the EU, US, China,... Does VECOM have any comments on this issue, sir?

Mr. Tran Van Trong : In China, the Chinese E-commerce Law (issued on August 3, 2018) stipulates: Sellers on the platform must fulfill tax obligations according to the provisions of law and enjoy tax incentives according to the provisions of law (Article 11); Sellers must issue paper invoices or electronic invoices and other purchase documents and service documents according to the provisions of law (Article 14).

In the US, Amazon's seller website clearly states to sellers: "You are responsible for determining your tax obligations and calculating, paying, and reporting all taxes you are liable for, regardless of whether you participate in Amazon's tax calculation service." It also states: "Amazon does not report or remit taxes to any government on behalf of sellers."

If the US government really requires e-commerce platforms to pay taxes on behalf of sellers, Amazon would not be able to make such an announcement.

In Southeast Asia, countries and territories such as Thailand, Indonesia, Singapore, Malaysia, the Philippines, and Taiwan (China) do not have regulations requiring third parties, such as e-commerce platforms, to declare taxes on behalf of sellers. Sellers are responsible for their own tax obligations. Some countries have regulations requiring platforms to deduct (emphasize “deduct”) and pay VAT to tax authorities for foreign sellers doing business in digital services.

These regulations are also available in Vietnam in Circular No. 80/2021/TT-BTC.

- In your opinion, what worrying consequences will occur if the regulation on e-commerce platforms declaring taxes on behalf of individuals/business households is applied in the near future?

The obligation for e-commerce platforms to declare and pay taxes on behalf of sellers is not consistent with the provisions of Article 24 of the Law on Personal Income Tax. Accordingly, the tax payment of income-paying organizations must be based on the deduction of income they pay to taxpayers, which is completely different in nature from declaring and paying taxes on behalf of sellers.

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Without a thorough solution, business households/individuals may leave the official e-commerce platform to do business on channels that are not subject to tax collection. Photo: Thach Thao

VECOM and its members are very concerned about the feasibility and risks that e-commerce platforms must bear when they are responsible for declaring and paying taxes on behalf of sellers, especially if there is a situation of incorrect declaration, under- or over-calculation of taxes payable by sellers,... while current laws do not have a tax refund mechanism for business households and individual businesses.

Not to mention, if there is no thorough solution, this regulation can cause business households and individuals to leave the official trading floor to do business on channels that are not subject to tax collection (for example, social networks...).

This can lead to consequences for tax management as well as e-commerce market management.

In the current context, when the items traded on the platform may be subject to different tax rates and the current law does not have a mechanism for tax settlement and refund for business households and individual businesses, we believe that requiring e-commerce platforms to declare and pay taxes on behalf of sellers is not feasible and too risky for the platforms.

Although this regulation may help reduce the number of declarations and the burden on tax authorities, in reality, all the burden will be placed on e-commerce platforms that do not have expertise and are not tax agents.

- Has any exchange given specific estimates of the “burden” you just mentioned?

Some large exchanges have estimated the compliance costs if they have to declare and pay taxes on behalf of sellers, ranging from tens of billions of VND to tens of millions of USD, depending on the scale of the exchange.

This expense comes from operational requirements, including: adding specialized personnel; changing organizational and operational structures; building and adjusting information and data management systems; performing administrative procedures such as: providing tax payment confirmation to sellers, resolving questions and complaints...

VECOM is ready to act as a bridge to help tax authorities and exchanges sit together to discuss and support thorough research of international experiences... to come up with feasible solutions.

Thank you!