Responsibilities of e-commerce platforms
On November 8, the Ministry of Finance officially responded to public concerns about tax management for cross-border e-commerce platforms operating in Vietnam but not yet registered for a license. What basis is there for suggesting that e-commerce platforms pay taxes on their behalf?
The Ministry of Finance said that the business activities of e-commerce platforms in Vietnam are business activities that must be licensed and subject to state management by the Ministry of Industry and Trade (according to the provisions of Decree No. 52/2013/ND-CP dated May 16, 2013 of the Government on e-commerce (amended and supplemented by Decree No. 85/2021/ND-CP).
Regarding the field of state management of domestic revenues (including revenues from e-commerce activities), based on the provisions of the Law on Tax Administration and Circular No. 80/2021/TT-BTC, e-commerce platform managers are responsible for registering, self-calculating, self-declaring, and self-paying taxes directly through the General Department of Taxation's Electronic Information Portal (the General Department of Taxation has deployed the Electronic Information Portal for foreign suppliers (NCCNN) since 2022); if it is discovered that NCCNN has declared incorrect revenue, the tax authority will compare data to determine revenue, request NCCNN to fulfill its obligations and conduct inspections and checks according to regulations if there are signs of fraud or tax evasion.
In addition, for sellers who are business households and individuals doing business on e-commerce platforms in general, the Ministry of Finance has reported to the Government to submit to the National Assembly amendments and supplements to the Law on Tax Administration, which stipulates the responsibility of organizations that are managers of e-commerce platforms (including domestic and foreign e-commerce platforms) with payment functions to deduct, pay taxes on behalf of, and declare tax obligations on behalf of business households and individuals doing business on the platform. When this regulation is approved, the Ministry of Finance will submit to the Government for promulgation a Decree providing specific guidance on support and coordination in implementation between the Tax Authority and organizations managing e-commerce platforms when deducting, paying taxes on behalf of, and declaring tax obligations on behalf of business households and individuals doing business on the platform.
Benefits of e-commerce platform owners paying taxes on behalf of businesses on the platform
To facilitate e-commerce trading floors and taxpayers during the implementation process, the Ministry of Finance has reported to the Government to submit to the National Assembly amendments and supplements to the Law on Tax Administration, which stipulates the responsibility of organizations that are managers of e-commerce trading floors with payment functions (including domestic and foreign organizations) to deduct, pay taxes on behalf of, and declare tax obligations on behalf of business households and individuals doing business on the floor.
This content is understood that when an e-commerce platform has the function of paying, deducting, and paying taxes on behalf of business individuals and business households on the platform, it must declare to the tax authority the tax information of the business households and individuals that the platform has deducted and paid taxes on their behalf. The information that the e-commerce platform has declared to the tax authority is the basis and database for the tax authority to manage the tax obligations of business households and individuals.
This regulation contributes to reducing the number of tax declaration points, and in general, it will reduce the cost of administrative procedure compliance for the whole society because only one point is needed, which is the e-commerce trading floor, to deduct, pay taxes on behalf of, and declare tax obligations on behalf of tens, hundreds of thousands of individuals and business households on the floor.
To implement this regulation, the Ministry of Finance will submit to the Government for promulgation a Decree providing specific guidance on support and coordination in implementation between the Tax Authority and organizations managing e-commerce floors and digital platforms, agreeing on the scope of responsibilities and obligations of organizations managing floors and platforms when deducting, paying taxes on behalf of and declaring tax obligations on behalf of households and individuals doing e-commerce business on the basis of organizing work and direct exchanges with a number of e-commerce floors.
This regulation is proposed based on the synthesis of difficulties and problems from management practices such as: current management policies do not meet the requirements for effective tax management of e-commerce business activities, especially with the e-commerce platform model; the provision of information on e-commerce trading floors is still incomplete and not close to the actual situation, making it difficult to identify, fully manage subjects, and control revenue on the floor; at the same time, tax authority resources are limited compared to the number of business individuals.
In addition, regarding the implementation of the mechanism of e-commerce platforms declaring and paying taxes on behalf of sellers: this is a highly recommended content for implementation in documents and studies of OECD, other international organizations (IMF, ADB, ...), as well as proven practical implementation effectiveness of advanced countries in the world and in the region (UK, EU, Australia, Thailand ...).
