E-commerce platforms such as Shopee, Lazada, Sendo, Tiki, etc. have long been popular in Vietnam, becoming an e-commerce platform connecting sellers and buyers. However, individuals and organizations earning high profits on these platforms have not paid taxes in full according to regulations, which is suspected to constitute acts of tax evasion. In the following article, ASL LAW will analyze the tax obligations of sellers on Vietnamese e-commerce platforms.
On February 6, 2023, the General Department of Taxation of Vietnam said that this agency has obtained information about more than 53,000 individuals and 14,800 organizations selling on Shopee, Lazada, Sendo, etc. to have the basis for tax collection. Up to this point, 258 e-commerce platforms, including Shopee, Lazada, and Sendo (excluding Tiki), have provided seller information on the e-commerce portal of the General Department of Taxation.
Data from the e-commerce portal by the end of 2022 shows that more than 14.5 million transactions with a total value of 4,500 billion VND took place through these platforms. However, according to the General Department of Taxation of Vietnam, the actual number of transactions and the actual transaction size are much higher than the above statistics.
What taxes do sellers who make profits on e-commerce platforms have to pay?
According to the provisions of Clause 2, Article 4 of Circular 40/2021/TT-BTC guiding the value-added tax and personal income tax, business households and individuals earn turnover from production and business activities in the calendar year of VND 100 million or less, are exempt from paying VAT and PIT.
Accordingly, if individuals and organizations have a turnover of 100 million VND or more, they must pay personal income tax and value added tax.
However, in all cases, the parties are responsible for making accurate, honest and complete tax returns and submitting tax records on time and thereby, taking responsibility before the law for the accuracy, truthfulness, and completeness of tax returns and tax records as prescribed.
If they are eligible for tax paying, online sellers will have to pay a tax of 1% for VAT and 0.5% for PIT as prescribed in Circular 40/2021/TT-BTC.
In addition to the above two taxes, individuals and organizations selling online may also have to pay license fees. If you are exempt from license fees, you do not need to pay this amount.
Is the e-commerce platform responsible for paying taxes on behalf of the seller?
In 2022, the Government of Vietnam issued Decree 91/2022/ND-CP amending and supplementing a number of articles of Decree 126 detailing the Law on Tax Administration effective from October 30, 2022.
In particular, there is a notable regulation that e-commerce platforms will not have to pay taxes on behalf of sellers, but only have to provide information to the authorities.
Specifically, the organization that is the owner of the e-commerce platform has the responsibility to provide fully, accurately, and on time to the tax authority information of the trader, organization or individual that has conducted part or the whole of the transaction relating to the buying and selling of goods and services on an e-commerce platform.
Before October 30 of last year, e-commerce platforms were expected to still pay taxes on behalf of sellers (although adoption and compliance are still incomplete). However, from the beginning of November 2022, e-commerce platforms will no longer have this responsibility.
Despite the promulgation of Decree 91/2022/ND-CP, Circular 40/2021/TT-BTC and related legal documents, the seller’s tax payment on e-commerce platforms is still subject to limited, there are many situations of payment evasion, difficult to control, conflicting with current tax laws.
For example, in some cases, individuals and organizations can conduct cross-border business activities that are not subject to taxation of any country based on traditional tax management principles.