The rapid growth of e-commerce has contributed significantly to Việt Nam's economy development, but it also brings challenges, particularly in tax management. This has led lawmakers to carefully revise the Tax Administration Law and VAT Law to ensure compliance with domestic regulations and alignment with international agreements.From April 1, 2025, e-commerce and digital platforms with payment functions will be required to declare and pay taxes on behalf of business households and individual sellers, as stipulated in the law amending nine laws passed by the National Assembly on November 29.The Ministry of Finance is also considering removing the tax exemption for low-value imported goods, to address tax revenue losses from e-commerce transactions.Currently, goods worth under VNĐ1 million (US$39) are exempt from taxes, in line with international commitments. However, the growth of e-commerce has led to more cross-border transactions of low-value goods, causing tax revenue losses. The ministry is reviewing this policy to protect domestic businesses and improve tax management.The two issues mentioned above have recently garnered significant attention and comments.A recent article on thesaigontimes.vn discusses the possibility of incorporating international best practices from the Organisation for Economic Co-operation and Development (OECD)'s recommendations into Việt Nam's draft Law on Tax Administration and Law on Value Added Tax (VAT) to foster a more equitable and business-friendly environment.In 2019, the OECD highlighted the key role digital platforms play in VAT collection for online transactions. The report proposed a framework for efficient VAT collection that eases administrative burdens for businesses and benefits tax authorities. Adopting this approach in Việt Nam could simplify tax collection for e-commerce, creating a fairer, more competitive business environment.The OECD recommends a 'full VAT liability' system, where digital platforms handle all VAT calculations, collections and payments, removing this responsibility from individual sellers and reducing double taxation risks. Việt Nam’s draft tax laws are moving towards this by requiring e-commerce platforms to manage VAT for businesses using their platforms, both domestic and foreign.Under Decree 52/2013/NĐ-CP, some platforms merely facilitate display or advertising, making them unsuitable for VAT collection. Therefore, the law should focus on platforms with 'online ordering' functions that can provide the necessary transaction data for accurate tax calculations. Furthermore, VAT obligations should only apply to transactions processed through online payment systems, excluding cash-on-delivery transactions where platforms cannot control the financial flows.The destination principle, where VAT is collected in the consumer’s country, is widely accepted for cross-border trade. The OECD recommends this approach, but managing cross-border VAT remains challenging due to difficulties in verifying transactions and determining the correct tax jurisdiction.For buyers, VAT/GST (Goods and Services Tax) is typically paid by them, but determining who collects it in cross-border transactions is complex. Proposed solutions like self-assessment have proven ineffective for individual consumers.E-commerce makes up over 60 per cent of Việt Nam's digital economy, with strong and continued growth expected in the near future. The country's e-commerce market is set to become the fastest-growing in ASEAN by 2026, with the potential to reach nearly US$50 billion in annual transactions by 2028, according to YouNet ECI and YouNet Media. This growth is supported by a favourable legal environment and an increasingly tech-savvy consumer base.In the first 11 months of 2024, Việt Nam’s e-commerce tax contributions reached VNĐ108 trillion ($4.25 billion), up 22 per cent from 2023, according to the General Department of Taxation.Foreign providers like Google, Meta, and TikTok contributed VNĐ19.7 trillion. The tax authority plans to improve tax management with a new portal for individual e-commerce taxpayers, stricter checks on foreign providers and increased inspections. Tax revenue from e-commerce has surged from nearly VNĐ1.6 trillion in 2021 to VNĐ97 trillion in 2023. (ICE HO CHI MINH CITY)

Fonte notizia: Vietnam News