The proposal on authorizing e-commerce platforms to declare and pay taxes to facilitate e-commerce trading floors and taxpayers. Photo: H.Anh

Comparing data to determine revenue and detect fraud

Regarding tax management for cross-border e-commerce platforms operating in Vietnam, the Ministry of Finance said that e-commerce trading activities in Vietnam are business activities that must be licensed and managed by the Ministry of Industry and Trade (according to the provisions of Decree No. 52/2013/ND-CP on e-commerce amended and supplemented by Decree No. 85/2021/ND-CP).

Regarding the field of state management of domestic revenues (including revenues from e-commerce activities), based on the provisions of the Law on Tax Administration and Circular No. 80/2021/TT-BTC, e-commerce platform managers are responsible for registering, self-calculating, self-declaring, and self-paying taxes directly through the General Department of Taxation's e-commerce portal.

The Tax Authority will conduct data comparison to determine revenue, and conduct inspections and checks according to regulations if there are signs of fraud or tax evasion.

In addition, the Ministry of Finance has reported to the Government to submit to the National Assembly to amend and supplement the Law on Tax Administration.

It stipulates the responsibility of organizations that are managers of e-commerce platforms (including domestic and foreign e-commerce platforms) with payment functions to deduct, pay taxes on behalf of, and declare tax obligations on behalf of business households and individuals on the platform.

When this regulation is approved, the Ministry of Finance will submit to the Government a Decree providing specific guidance on support and coordination in implementation between the Tax Authority and organizations managing e-commerce platforms for tax deduction, payment, declaration on behalf of of business households and individuals on the platform.

Regarding this issue, at the regular Government press conference in October, Mr. Mai Son, Deputy Director General of the General Department of Taxation, said that the General Department of Taxation has launched the Electronic Portal for Foreign Suppliers since March 2022.

“If it is discovered that a foreign supplier has incorrectly declared revenue, the Tax Authority will compare data to determine revenue, request the foreign supplier to fulfill its obligations, and conduct inspections and checks according to regulations if there are signs of fraud or tax evasion,” Mr. Mai Son stated.

Regarding the Temu e-commerce platform, the General Department of Taxation said that on September 4, 2024, Elementary Innovation Pte. Ltd (owner and operator of the Temu e-commerce platform in Vietnam) registered for tax and got a tax code.

Temu e-commerce platform has been registered for tax and got a tax code. Photo: H.Anh

Elementary Innovation Pte. Ltd submitted the tax declaration for the third quarter of 2024 as prescribed. In which, the revenue was declared as zero and the explanation of revenue arising from October 2024 will be fully declared in the fourth quarter of 2024.

Mr. Mai Son emphasized that the General Department of Taxation is closely monitoring and urging Temu's revenue declaration in the fourth quarter of 2024 with the declaration deadline being January 30, 2025.

Solutions proposed based on experience of other countries

The Ministry of Finance is proposing to clarify the regulations on e-commerce platforms to implement the authorized tax declaration and payment when amending the Law on Tax Administration. The Ministry of Finance said that this proposal aims to facilitate e-commerce platforms and taxpayers, solve difficulties and problems from management practices.

This content is understood as when an e-commerce platform has the function of deducting and paying taxes on behalf of business individuals and households on the platform, the e-commerce platform must declare to the Tax authority the tax information of the business households and individuals that the platform has deducted and paid taxes on their behalf.

The information that the e-commerce platform has declared to the Tax authority is the basis and database for the Tax authority to manage the tax obligations of business households and individuals.

According to the Ministry of Finance, this regulation contributes to reducing the number of tax declaration points, and it will reduce the cost of administrative procedure compliance for the whole society because only one point as the e-commerce trading platform implements tax deduction, payment and declaration on behalf of tens, hundreds of thousands of individuals and business households on the platform.

To implement this regulation, the Ministry of Finance will submit to the Government a Decree providing specific guidance on support and coordination in the implementation between the Tax Authority and the organizations managing e-commerce floors and digital platforms, unifying the scope of responsibilities and obligations of the organizations managing floors and platforms when implement tax deduction, payment and declaration on behalf of households and individuals doing e-commerce business.

This regulation is proposed on the basis of synthesizing difficulties and obstacles from management practices as well as implementation recommendations in documents and studies of the OECD and other international organizations (IMF, ADB, ...)

This issue has also been proven through the effective implementation of advanced countries in the world and in the region, such as the UK, EU, Australia, Thailand, Taiwan (China)...