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E-commerce tax collection still "modest"

Tax revenue from e-commerce activities has increased gradually over the years, but is still modest compared to the actual development of this activity. Tax revenue from e-commerce activities has increased gradually over the years, but is still modest compared to the actual development of this activity.

The Ministry of Finance reported that revenue from e-commerce activities through organisations in Vietnam declared and paid on behalf of contractor tax since 2018 has reached nearly 5.6 trillion VND (233.3 million USD).

This revenue tends to grow over the years with the average rate of revenue in the 2018-2021 period reaches 130%.

The revenue soared from last year, reaching 1.6 trillion VND, an increase of 39% compared to 2020.

The Ministry of Finance said there were currently 37 foreign suppliers around the world registered to pay corporate income tax and value added tax directly through the portal for foreign suppliers of the General Department of Taxation, with the declared tax amount, paid tax over 3.1 trillion VND.

Among them, some foreign suppliers declare and pay large taxes such as Meta (Facebook) paying over 1.7 trillion VND and Google paying nearly 1 trillion VND.

Nguyen Bang Thang, Director of the Department of Large Taxpayers, said that in order to manage taxes for foreign suppliers who were not based in Vietnam, the tax authorities had indirectly worked embassies, as well as large audit consulting organisations through which to mobilise and communicate.

During the implementation process, foreign suppliers have been very active and proactive in co-ordinating with tax authorities in understanding policies, declaring and paying taxes through the portal for abroad suppliers by the General Department of Taxation.

In addition to tax collection of foreign suppliers in Vietnam, managing tax collection for Vietnamese organisations and individuals earning income from e-commerce businesses is also promoted by the General Department of Taxation.

Accordingly, revenue increased over the years, especially rapidly from last year with 261 billion VND.

In the first eight months of this year, it rose sharply to 520.7 billion VND, twice as much as the revenue last year.

However, Nguyen Thi Lan Anh, Director of the Tax Administration Department of small and medium enterprises and individual and business households, said it was the rapid and explosive development with many new forms in the past that had posed challenges to the tax authorities.

These challenges include difficulties in fully managing revenue sources, tax payers, and in determining the tax base.

In addition, it was difficult to clearly distinguish the type of income as a tax base because in the digital economy it is difficult to distinguish some types of income, especially copyright, service fees and business profits, said Anh.

The next issue was controlling business transactions to manage tax collectors for e-commerce business, she added.

In addition, it was not easy to control cash flow when the payment system in the form of COD (cash on delivery) was more popular than non-cash payment methods, she said.

In order to continue to improve the efficiency of tax collection management for e-commerce activities, in early October, the Prime Minister issued Official Letter 889/CD-TTg directing ministries, branches and localities to improve effective tax collection management for e-commerce activities and business on digital platforms.

Following the direction of the Prime Minister, the Ministry of Finance and the General Department of Taxation have closely co-ordinated with ministries and branches to build a database for e-commerce activities; and at the same time apply modern technologies in tax registration, tax declaration, and tax payment for e-commerce and business on digital platforms.

Anh also said that the tax industry continued to modernise tax administration; upgrade information technology infrastructure to connect and store information to support and connect with taxpayers in a direct electronic form at the website of the General Department of Taxation./.