E-commerce tax management: Review from individuals to organizations providing services

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From 2017 until now, Hanoi Tax Department has reviewed 13,422 Facebook accounts with online businesses. Photo: S.T.

Review of 13,422 Facebook accounts

As a unit managing enterprises, taxpayers engaging in e-commerce business, Hanoi Tax Department has always strictly controlled as coordinated with related ministries to avoid e-commerce tax losses.

The Department has taken many measures to manage e-commerce businesses with the aim of both facilitating taxpayers and preventing negative consequences of e-commerce and expanding tax collection points.

Director of Hanoi Tax Department, Mai Son, said the Department has focused on guiding, supporting and encouraging establishments to register under the Law on Tax Administration and the performance of their tax obligations on behalf of foreign contractors as prescribed, while also reviewing and inspecting some organizations and individuals engaging in e-commerce business in the city. Thereby summing up problems during the implementation to propose to the Ministry of Finance and the Prime Minister to improve the legal basis for these groups.

Hanoi Tax Department has also identified and classified objects related to e-commerce activities and taken specific measures for each group. According to the Tax Department's report, for individuals doing online business, from 2017 until now, Hanoi Tax Department has reviewed 13,422 Facebook accounts with online business activities. Of which, about 2,000 individuals have registered and been given tax codes to declare and pay taxes. The Tax agency also made notice and guided the tax registration and declaration and sent instruction messages to individuals involved in e-commerce businesses.

Currently, the Department is coordinating with information technology units to gather information of individuals doing business via social networks. The Tax Department has asked the Department of Telecommunications and telecommunications service provider (Mobifone, Vinaphone and Viettel) to provide personal information of individuals who have Fanpages to the Tax agency. At the same time, studying and building other options to verify and screen subjects doing business.

Particularly for organizations and individuals providing applications and products on channels such as Google Play and Apple Store, Hanoi Tax Department has coordinated with commercial banks to synthesize cash flow, make a list of these organizations and individuals to verify their business activities and guide them through the requirements for the business and tax registration and declaration.

For organizations providing services and sales, based on the list of enterprises with e-commerce service activities registering with the Ministry of Industry and Trade, combined with the list collected from press information and other information sources, the Tax Department supplemented enterprises with e-commerce business into the unexpected inspection plan.

Revise both institutions and policies

Speaking about difficulties in e-commerce tax management, Deputy Director of the E-Commerce and Digital Economy Agency, Lai Viet Anh, said that tax management and e-commerce management is facing difficulties in determining the revenue of organizations and individuals doing online business.

“How to collect data to verify revenue, thereby determining tax rates for enterprises is extremely hard. Not only the Tax agency, but the Ministry of Industry and Trade itself – the state management unit on e-commerce – also faces difficulties in collecting data," said Lai Viet Anh.

She suggested that to manage the e-commerce business, a shared database for Tax agency, Customs agency, State Bank and the management agency on e-commerce like the Ministry of Industry and Trade, to access and update the database on a regular and continuous basis should be established.

Director of Tax Policy Department under the General Department of Taxation, Luu Duc Huy said that the Taxation sector is carrying out solutions to manage e-commerce tax. In particular, institutional solutions are amending and supplementing provisions of tax laws (such as Law on Value Added Tax, Law on Corporate Income Tax, Law on Personal Income Tax and Law on Import and Export Tax and guiding documents) to cover of all subjects and forms of e-commerce business arising in Vietnam.

Notably, Huy said, one of the important contents in the Draft Law on Tax Administration (revised) which will be approved by the National Assembly at the 7th session (ongoing) is supplementing contents related to tax administration for e-commerce business to support and improve efficiency of tax administration in e-commerce.

Challenges for Customs management in the cross-border e-commerce environment

Mai Son also proposed, for the revised Law on Tax Administration to promote efficiency and effectiveness, contributing to improving the quality and efficiency of tax administration, which requires the attention, direction and support of all levels and sectors for the Tax agency.

"There should be regulations and mechanisms for information sharing, and a shared database to serve the state administration in general and tax administration in particular," Mai Son proposed.