Optimizing E-commerce Tax Administration

Mr. Mai Son, Deputy General Director of the General Department of Taxation (GDT), reported at a press conference on e-commerce tax administration in Vietnam, held in Hanoi, that taxable revenue from e-commerce businesses reached VND3,100 trillion (US$130.57 billion) in 2022 and increased to VND3,500 trillion (US$146.28 billion) in 2023. During these periods, taxes paid amounted to VND83 trillion and VND97 trillion respectively.

Enhancing inter-agency coordination

The General Department of Taxation (GDT) has implemented comprehensive short-term and long-term measures to bolster tax administration in the e-commerce sector. Notably, the agency has advised and advocated for governmental and legislative actions to enact tax legislation, thereby fortifying the legal framework for effective tax oversight in e-commerce. These initiatives aim to augment the accountability of authorities and e-commerce platform operators. GDT has disseminated and supported diverse and impactful initiatives to promote policies fostering the sustainable and competitive growth of e-commerce. To date, GDT has facilitated the declaration and payment of taxes exceeding VND14.5 trillion by 94 foreign suppliers, including Google and Facebook.

“Foreign suppliers are paying more tax to the State budget and declared their full data every period,” a tax officer said.

The tax sector has developed and officially operated e-commerce database legally collected from many information sources. The e-commerce database is centralized at GDT to support local tax authorities in mining and using in e-commerce tax management; direct inspection and examination at all-level tax authorities, focusing on taxpayers with e-commerce and business on digital platforms to prevent revenue loss and enhance awareness of regulatory compliance for organizations and individuals doing e-commerce business.

To fortify state management of tax, including in e-commerce, the Ministry of Finance (General Department of Taxation) has closely coordinated with relevant e-commerce authorities by signing work coordination agreements.

Accordingly, the Ministry of Public Security (MPS) and MoF (GDT) have completed connecting and sharing the national population database to conduct a synchronous review of the national population database with the tax code database. So far, if excluding tax codes of dependents and tax codes of persons without tax obligations or without documentary information (citizen identity papers), over 90% of tax code database and population database review and synchronization has been completed, laying the foundation for using citizen identity as the tax code.

MoF has completed the integration of electronic identification accounts (VneID) with tax management platforms of tax authorities. As a result, 663,157 connections have been established so far, with a total of 400,791 access visits.

The Ministry of Industry and Trade (MoIT), the Ministry of Information and Communications (MIC) and the State Bank of Vietnam (SBV) have initially completed sharing the database with GDT, including data of 929 e-commerce service websites; data on 130 organizations operating in telecommunications, advertising and broadcasting fields; data on payment accounts of over 9 million organizations and over 121 million individuals at 96 commercial banks.

MoF, MPS, MoIT, MIC and SBV agreed on a detailed plan for implementation of Directive 18/CT-TTg on electronic data connection and sharing and regularly ensured timely support for tax management of e-commerce.

People-centric and business-focused approach

According to GDT officer, the tax sector has adopted a targeted strategy towards e-commerce activities, tailoring tax management measures to various e-commerce platforms, including eight distinct categories: e-commerce exchange platforms, e-commerce websites/applications, social media platforms, traffic, transportation, and logistics platforms, agent platforms, subscription platforms, advertising platforms, and application store platforms. Recent data reveals that the taxable revenue generated by businesses and individuals engaged in e-commerce amounted to VND3,100 trillion (US$130.57 billion) in 2022, rising to VND3,500 trillion (US$146.28 billion) in 2023. Concurrently, tax payments totaled VND83 trillion and VND97 trillion.

“The tax sector will continue to improve policy mechanisms to cover all e-commerce activities while creating favorable conditions for tax declaration and payment using electronic invoices for organizations and individuals with e-commerce business,” said Deputy General Director Mai Son.

GDT will continue to carry out effective communication and support programs for taxpayers like communications on mass media (such as newspapers, radio and television), direct dialogues and 24/7 contact hotline. To strengthen tax administration of foreign suppliers, GDT will coordinate with Vietnamese e-commerce exchanges to guide foreign business entities to register taxes, declare and pay taxes on GDT’s electronic portal.

The tax sector will continue to review and enrich the e-commerce database from information sources from State agencies and business entities in the e-commerce ecosystem. Based on collected data, the sector will continue to arrange data and analyze risks, including the use of machine learning - artificial intelligence (AI) to process data, work out solutions, deliver warnings and apply appropriate tax management measures for each entity with e-commerce business according to risk management principles.

By Huong Hau, Vietnam Business Forum