Strengthening inspection and examination of organizations and individuals engaged in e-commerce activities

There are eight e-commerce websites operating in cross-border trade in Vietnam which have fulfilled their tax obligations

Increase tax revenue from e-commerce

According to the General Department of Taxation, according to data from the tax administration system, there are currently 14 large corporations and technology companies in the world and eight e-commerce websites operating in cross-border trade in Vietnam which have fulfilled their tax obligations. The taxes collected that are deducted and payment substitute via Vietnamese organizations and individuals are about VND1,000 billion/year.

Along with that, for Vietnamese organizations that have signed online advertising contracts with foreign organizations that do not have legal entities in Vietnam such as Google, Youtube, Facebook, from 2018 to the end of September 2021, these units have declared and paid taxes with a total amount of more than VND4,099 billion. In 2020, tax collected from cross-border e-commerce activities reached VND1,143.8 billion; in the first nine months of 2021 reached VND1,017.38 billion (equivalent to 88.95% in 2020).

Notably, the General Department of Taxation said that according to statistics, revenue from self-declared individuals, tax arrears and fines through inspection and examination for individuals residing in Vietnam providing cross-border services (marketing, online advertising, digital content production, information technology application) on foreign social networking sites such as Google, Facebook, Youtube, by the end of June 2021 is over VND454 billion, mainly concentrated in big tax departments such as Hanoi Tax Department (reaching over VND167 billion), Ho Chi Minh City (reaching over VND122 billion), Da Nang (reaching VND30 billion).

Particularly, in the first six months of 2021, the whole tax sector has increased the collection of more than VND134 billion for organizations and individuals with e-commerce activities. Some provinces and cities have promoted tax administration for this activity. By the end of September 2021, Hanoi has collected VND226 billion (an increase of VND59 billion compared to June 2021); Binh Dinh collected VND14.27 billion (up VND10,502 billion); Thai Nguyen has collected VND908 million.

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In fact, the tax management of e-commerce business activities is still challenging for the tax sector. However, the tax sector has strengthened tax administration with this activity and recorded remarkable results.

Specifically, the General Department of Taxation has issued many official documents directing the whole sector to strengthen the implementation of measures to improve the efficiency of tax administration, tax inspection and examination for e-commerce businesses, especially focusing on digital-based business activities of foreign suppliers who do not have a business establishment in Vietnam and are doing business through e-commerce platforms.

The local tax authorities have also actively coordinated with competent forces at all levels (including police of communes, wards and townships), commercial banks, telecommunications companies, and companies operating in the field of information technology, transmission and provision of network infrastructure in the area to fully update information of organizations and individuals engaged in e-commerce activities.

The Tax Department also drastically collects taxes from organizations and individuals that conduct online business without declaring information to the tax authorities. At the same time, proactively share and provide information to relevant agencies for organizations and individuals showing signs of law violation in e-commerce activities in order to handle them.

In particular, in 2021, the General Department of Taxation issued a directive document on the implementation of the plan to strengthen the fight against smuggling, trade fraud and counterfeiting in e-commerce activities of the National Steering Committee 389 requesting tax departments set up steering committees for tax administration on business activities.

Along with that is to coordinate with ward police and residential groups in identifying addresses, verifying and identifying people with online sales activities. Reviewing the information channels on social networking sites of famous people, with many followers to capture and put into tax management.

Recently, the Ministry of Finance (General Department of Taxation) has developed a project: "Tax management for e-commerce activities in Vietnam".

Accordingly, in the short-term roadmap from now to the end of 2023, the Ministry of Finance would focus on solutions to strengthen management through a number of important solutions such as: communication and support for taxpayers; implementing inspection and examination by subject; modernize tax administration; building a database for risk management; coordinate with relevant ministries, sector, organizations and associations to exchange and connect information.

For the long-term roadmap to 2025, the Ministry of Finance will propose amendments to the Tax Laws and specialized laws related to e-commerce management; develop a project to supplement the investigation function for the tax authority.