Taxing Facebook: Hard but not impossible!

	HCM City Stock Exchange introduce Facebook page
	Strictly handle individuals with high income who avoid paying taxes
	The Taxation discovered more than 14,000 accounts engaged in e-commerce

Currently, Facebook's revenue in Vietnam has reached more than 200 million USD. Photo: Thuy Linh

Loose legal basis

Recently, the Department of Radio, Television and Electronic Information (Ministry of Information and Communications) said that Facebook social network violates Vietnamese laws in three major areas including: Management of information content; online advertising; taxes and cross-border payments. In particular, according to this Department, Facebook operates in Vietnam, receives money from Vietnamese users to run advertising but does not pay taxes in Vietnam.

With Facebook, at present, the state budget has lost 2 kinds of tax, the first is that Facebook receives money from individuals doing business via social networks in Vietnam but not with contractor tax; The second is receiving money from business individuals on social networks.

Also according to the Department of Radio, Television and Electronics Information, Facebook's revenue in Vietnam now reaches more than 200 million USD. However, the Tax Agency is still having trouble managing Facebook taxes. Although there are 8 domestic suppliers cooperating with Facebook (FPT, VNPT, Viettel...) and placing about 900 servers in Vietnam, but because Facebook has not yet obeyed Vietnamese laws, has not set up a representative office. In Vietnam (without legal status), the tax collection from Facebook is currently not possible.

According to Mr. Nguyen Van Phung, Director of Tax Administration Department of a large enterprise, Ministry of Finance, to collect taxes from business activities on Facebook in Vietnam, authorities are applying contractor tax, means to implement withholding tax at source with units, organizations and individuals in Vietnam having business activities on Facebook. However, authorities have a lot of difficulties in collecting this tax.

In addition, currently, with the existence of Facebook in Vietnam, the number of business individuals and income generation from this social network is not small. As a rule, business individuals must declare and pay taxes to the state, but many individuals through Facebook sell and avoid tax. At the same time, the State also stipulates that only individuals who sell goods via social networks are to pay sales tax on 100 million VND /year or more.

Mr. Nguyen Van Phung said that it is very difficult to collect tax on business people through Facebook network. The reason is that the tax industry will not be able to access each person's Facebook account and collect taxes because of lack of evidence and information. The tax authorities also do not have information about individuals and organizations that pay for advertising to Facebook through credit cards, because there is currently no regulation on coordination between tax authorities and banks.

In particular, in the context of human resources for inspection and examination, the tax industry is limited in its ability to control accounts of tens of thousands of individuals selling goods through Facebook, for determining the turnover of over 100 million VND /year, to collect personal income tax, which is not feasible.

Request Facebook to set the server

According to Mr. Phung, it is necessary to ask Facebook to set up a representative office in Vietnam to solve the tax problem of this social network when doing business in Vietnam market.

According to the opinion of Ms. Nguyen Thi Cuc, Chairman of Vietnam Tax Consulting Association, in order to control, firstly, it is necessary to control how many organizations and individuals are currently conducting online business through the social networks.

"First registration is required. Currently, large tax departments in Hanoi and Ho Chi Minh City have searched their database to inform those business organizations and individuals that have registered their tax codes. However, due to the voluntary nature, the number of individuals who come to register is actually very small," Ms. Cuc said.

Ms. Nguyen Thi Cuc also said that in order to manage personal sales, there must be specific regulations to force them to register their business and register their tax codes. If you do not register for a business, you will be fined, but if you register and your revenue is less than 100 million VND / year, you will be exempt from tax. When there are such regulations, the information management will be put into order by the Taxation Sector, then with the confirmation of revenue over the threshold of 100 million VND / year will proceed to collect taxes.

"The amount of cash revenue will not be much, but it will focus mainly on banking transactions. So commercial banks and e-wallet models, must have a connection with revenue figures to tax authorities, and must have responsibility to provide to the Tax authorities when requested,” said Ms. Cuc.

​Facebook vows to set up exclusive channel to resolve Vietnam’s requests Facebook will set up a channel to exclusively receive requests from the Vietnamese government to handle accounts ...

Currently, the General Department of Taxation is very aggressive for action. Tax authorities are determined to collect taxes for 2019 for Facebook, but also face some difficulties because of domestic and foreign factors. Therefore, in the Draft Law on Tax Administration (amended), the Tax Agency has studied and proposed some solutions, such as a request to Facebook to set up a server or open a representative office in Vietnam, forcing payment through Napas portal... With these solutions, the Taxation sector expects to be able to closely manage this social network and prevent tax losses for the state budget.