Improving tax management on online trading platforms
In order to enhance the effectiveness of tax management for business households and individuals doing business on e-commerce platforms and at the same time create favorable conditions for them to fulfill their tax obligations, the Ministry of Finance has proposed regulations requiring e-commerce platforms to deduct, declare and pay taxes on behalf of business entities.
This mechanism not only ensures transparency and fairness in tax administration but also minimizes costs and administrative burdens for society. This mechanism not only ensures transparency and fairness in tax administration but also minimizes costs and administrative burdens for society.
On November 22, 2024, the Ministry of Finance held a meeting with the Vietnam E-commerce Association and major e-commerce platforms in Vietnam to listen to opinions and find the most effective implementation plan. The meeting showed the high interest of the relevant parties in ensuring that the new implementation mechanism does not cause difficulties but, on the contrary, actively supports business households, individual businesses as well as tax authorities.
Representatives of e-commerce platforms pointed out a number of challenges, such as large transaction volumes and the complexity of accurately determining the taxes to be deducted. However, in the spirit of cooperation, the Ministry of Finance has committed to receiving opinions, resolving difficulties and providing appropriate solutions, and issuing detailed instructions on how to do so.
Regulations are synchronous and learn from international standards.
According to the draft amendment to the Law on Tax Administration, organizations managing e-commerce trading floors with payment functions, including both domestic and foreign organizations, will be responsible for withholding and paying taxes on behalf of households and individuals doing business on the floors. This regulation was developed by the Ministry of Finance based on recommendations from international organizations such as the OECD, IMF, ADB, as well as practical experience in advanced countries such as the UK, EU, Australia, Thailand, and Taiwan (China).
Assigning this responsibility to e-commerce platforms not only reduces the number of tax declaration points but also helps simplify administrative procedures for management agencies and business people. Instead of each individual and business household having to declare taxes themselves, now there is only one point of contact, which is the e-commerce platform. This is especially meaningful in the context of e-commerce platforms growing, with tens of thousands of transactions taking place every day.
Dual benefits: Support business, promote economic growth
The implementation of this regulation not only helps business households and individuals reduce the burden of declaration but also supports e-commerce platforms to ensure compliance with the law. For state agencies, the regulation contributes to improving the efficiency of tax management, expanding budget revenue sources and promoting sustainable economic growth.
E-commerce platforms, as intermediaries, will become an important bridge to help improve transparency in the tax system and strengthen people's trust in public financial policies. With the spirit of learning and improving, the Ministry of Finance is making efforts to optimize this process, ensuring the interests of all parties involved.
The new regulation is not only a step forward in tax administration reform but also an affirmation of Vietnam’s commitment to integrating and learning international standards. With close coordination between management agencies, e-commerce platforms and traders, this mechanism is expected to bring practical effects in both the short and long term.
