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Starting July 1, 2025, Vietnam will implement significant new regulations on e-taxation and digital commerce, marking a key milestone in the development of a legal framework for the digital economy. While these changes offer major opportunities, they also introduce substantial compliance shifts for both domestic and international enterprises doing business in Vietnam.
1. Key New Regulations
- Expanded definition of “cross-border digital services”: This includes online advertising across borders, cloud computing services, and e-commerce platforms without a physical presence in Vietnam but serving Vietnamese consumers.
- Electronic VAT calculation and deduction: Foreign businesses providing digital services to Vietnamese customers will be required to declare and pay VAT at a fixed rate. Domestic companies will be responsible for withholding tax when making payments through intermediary platforms.
- Mandatory reporting of digital transactions: All digital commerce activities must be reported periodically, including invoice data and transactions with individuals and enterprises. Full implementation of electronic invoicing is required.
- Digitalized audit processes: The General Department of Taxation will deploy digital audit systems to monitor e-transactions in real time, enhancing traceability, inspection capacity, and efforts to prevent tax evasion.
2. Main Impacts on doing business in Vietnam
For domestic enterprises
- Greater tax compliance complexity: Companies involved in digital services or e-commerce must promptly upgrade accounting systems to distinguish between domestic and international transactions for accurate tax reporting.
- Changes in accounting and payment procedures: All online contracts and payments must align with e-invoicing systems. Entities involved in international payments must prepare specific reports to meet regulatory requirements.
For foreign businesses and cross-border platforms
- Mandatory tax registration in Vietnam if revenue from Vietnamese clients exceeds regulatory thresholds.
- Obligation to declare and pay VAT at fixed rates, even without a legal presence in Vietnam.
- Increased legal risks and potential penalties for non-compliance, as tax authorities now have broader access to online transaction data to detect underreporting or tax evasion.
3. Common Risks
- Misidentification of taxable entities: Confusion between domestic and cross-border transactions may lead to incorrect declarations or overlooked obligations.
- Mismatch between e-invoices and international payment documentation: This can result in tax reassessments, penalties, or administrative fines.
- Failure to submit periodic transaction reports or update systems: Non-compliance may be penalized under Decree No. 123/2023/ND-CP, with fines potentially reaching tens of millions of VND.
4. Preparation and Risk Mitigation Strategies
- Review accounting and e-invoicing systems early to ensure clear differentiation between domestic and international transactions.
- Develop internal procedures for VAT declarations on digital platforms, especially for digital services and cross-border commerce.
- Train accounting, tax, and internal audit staff to properly classify transactions and comply with new rules on time.
- Consider partnering with tax professionals or accounting service providers, especially for businesses engaged in complex B2C transactions.
- Monitor updates and guidance from the General Department of Taxation to adjust declarations in response to policy changes.
5. Conclusion
The new e-taxation and digital commerce regulations coming into force on July 1, 2025, represent a pivotal advancement in Vietnam’s digital economy. By proactively reviewing systems, training personnel, and assessing legal risks, enterprises doing business in Vietnam can seize market opportunities while ensuring compliance and avoiding costly errors or penalties.
ASL Law is a leading full-service and independent Vietnamese law firm made up of experienced and talented lawyers. ASL Law is ranked as the top tier Law Firm in Vietnam by Legal500, Asia Law, WTR, and Asia Business Law Journal. Based in both Hanoi and Ho Chi Minh City in Vietnam, the firm’s main purpose is to provide the most practical, efficient and lawful advice to its domestic and international clients. If we can be of assistance, please email to [email protected].
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