Pháp luật quản lý thuế đối với hoạt động thương mại điện tử
Kỷ yếu Hội thảo quốc tế “Thương mại và phân phối” lần 2 năm 2020
TAX ADMINISTRATION REGULATIONS ON E-COMMERCE ACTIVITIES
PHÁP LUẬT QUẢN LÝ THUẾ ĐỐI VỚI HOẠT ĐỘNG THƯƠNG MẠI ĐIỆN TỬ
Phan Phuong Nam, Nguyen Thi Phuong Ha
Hochiminh City University of Law
Abstract
The application of digital technology to activities relating to the provision of goods and services has
caused problems for tax administration and changes in legal regulations. The tax administration law on e-
commerce activities in Vietnam, although has been supplemented, still contains certain limitations in terms of
tax collection measures targeting e-commerce transactions; coordination mechanisms to provide information of
taxpayers to tax agencies. This paper proposes detailed solutions to the on-going issues, such as i) amending
certain legal provisions to maximize the effectiveness of tax collection for cross-border e-commerce; ii)
changing methods of regulating information disclosure made by transaction-related persons to thereby ensure
effective tax administration aspects of e-commerce activities.
Keywords: tax agencies, tax withholding, tax administration, e-commerce.
1. Introduction
As a result of advances in technology and the widespread use of the internet, different types of
digital services have emerged rapidly. Along with this process, e-commerce also has a favourable and
ideal condition to grow gradually, bringing opportunities for doing business and market expansion to
investors, as well as fostering the activities of buying, selling, supplying cross-border goods and
services. The growth of e-commerce has then consequently led to the establishment of tax
administration regulations on this type of activities. However, in Vietnam, these statutory regulations
in many cases failed to keep pace with the development of e-commerce in reality. The reasons for this
fact are:
First, it is difficult and complicated to evaluate income generated by e-commerce activities of
business entities and other service providers. The difficulty and complication have been caused by the
challenges in determining places where e-commerce activities are conducted and sources of income.
Especially for goods and services provided across borders, tax administration is a greater challenge
given the absence of a coordination between tax agencies and providers, users and payment
institutions. In fact, countries around the world have been working to develop effective methods and
legal mechanisms to control different forms of e-commerce activities.
Second, methods of tax collection in e-commerce cause arduousness in execution for the tax
agencies no matter who is the object of application. If users of imported services are to be responsible
for making tax declaration on the providers’ behalf under the tax withholding method, then will tax
agencies be able to monitor all users’ performance of their responsibility? Or if providers are
responsible for tax declaration, will tax agencies have the competence to request and impose penalties
on providers located outside the territory of Vietnam?
The following contents of this paper focus on the current Vietnamese legal regulations relating
to the above-mentioned issues and present recommendations for improvement.
2. Requirements for e-commerce tax administration
Basically, tax regulations applied to e-commerce are also the regulations applied to the
traditional buying and selling of goods and services, the only different element is the electronic
platform in the type of e-commerce. Therefore, the requirements for e-commerce tax administration
are in essence similar to those set out for traditional commerce tax administration, these requirements
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include fairness in the process of tax collection [1], effectiveness in tax administration [2], avoidance
of double taxation [3], harmonization of economic benefits between the government and citizens,
publicity and transparency [4]. The similarity between the tax administration requirements for e-
commerce and traditional commerce emphasizes the purpose of tax collection imposed on e-
commerce, which is to ensure fairness among subjects conducting traditional business activities and
subjects conducting e-commerce activities.
However, this paper shares another point of view. In certain circumstances, it is necessary to
prioritize effectiveness over fairness. For instance, in Vietnam today, when income management has
still not shown fully effectiveness, fairness cannot be absolutely but relatively guaranteed. In this case,
effectiveness should be at the centre of focus. This means that establishing an effective tax collection
of e-commerce will be a priority than ensuring fairness (moreover, fairness is not easy to be
determined and there are a number of theoretical and practical issues relating to “what is fairness”. So
not prioritizing fairness helps reduce complication and pressure for the tax collection process. And
besides, an effective tax collection mechanism to an extent can assure fairness).
3. Inadequacies in tax administration regulations on e-commerce activities
E-commerce activities include the supply of goods and provision of services. These activities
may take place within the country or across borders. Therefore, the inadequacies in tax administration
regulations will be divided into two parts, one is for e-commerce activities within Vietnam and another
is for cross-border e-commerce activities.
3.1. Inadequacies in tax administration regulations on e-commerce activities within Vietnam
In Vietnam, the sale of goods and services in the form of e-commerce are carried out through
sellers’ self-created websites or through domestic e-commerce platforms, so-called online
marketplaces.
For the sale conducted through sellers’ websites, there are almost no major inadequacies found
in tax administration law. The law does not prohibit sellers to set up websites to sell goods, only
requires them to comply with tax obligations as prescribed in the law [5]. The current tax
administration mechanism can effectively manage and monitor sellers’ performance of their
obligations. There are also sanctions in place to deal with violations. Therefore, for this form of sale,
tax administration can be carried out with almost no difficulties.
Regarding the sale conducted on e-commerce platforms or online marketplaces, this is where a
number of issues arise. Currently, there is a variety of e-commerce platforms that facilitate e-
commerce sale and purchase of goods such as Lazada, Tiki, Shopee and many others. On these sites,
sellers can open an online shop by opening an account and registering themselves as organizations or
individuals. As to organizations, these are business entities that came into existence through a legal
process of registration at a competent agency, so the information on their operation and income are
easy to be managed by governmental agencies. Therefore, sellers as organizations are easy-to-manage
entities and normally do not pose difficulties for tax collection. However, it is not the same for sellers
who are individuals.
Under tax regulations, individuals selling goods on e-commerce platforms have to, by their
own, make tax declaration and payment. Tax agencies is now facing the challenge of tracking and
controlling the activities and tax obligation performance of these individuals. The Official Letter
2623/TCT-CS on “strengthening tax administration for e-commerce business activities” issued on June
16, 2017, by the General Department of Taxation directs that the rules of the Law on Tax
Administration 2019 will be applied to individuals trading on e-commerce platforms. Article 98 of the
Law on Tax Administration 2019 requires subjects involved in e-commerce activities to provide
sellers' information to tax agencies. So basically, to effectively manage the sale of goods conducted by
individuals on e-commerce platforms, tax agencies have to rely on the cooperation of e-commerce
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platforms for sellers’ information, and request commercial banks (where sellers open their accounts
and have register such accounts in the e-commerce platforms) to provide account information of each
seller then determine whether such seller is subject to relevant taxes [6]. Meanwhile, tax agencies have
a limited number of employees, which possibly results in ineffective tax collection and tax
administration.
In addition, taxation of sale and purchase on social networking sites or chat apps (Zalo,
Messenger, Skype, Blue, …) also pose difficulties for tax agencies. There is no denying that social
networking sites and chat apps create favorable condition for people to sell goods without going
through registration procedures like those required by e-commerce platforms (sellers on social network
sites does not have to notify administrators of their business type or bank account numbers). Due to
this fact, the success of taxation of these activities completely relies on the ability to identify taxpayers
and collect their information by tax agencies and on the cooperation between tax agencies and
commercial banks where the taxpayers’ have accounts. In practice, collecting tax from this group of
individuals is often very difficult due to the tax agencies’ inability to collect information and
commercial banks’ non-cooperation.
3.2. Inadequacies in tax administration regulations on cross-border e-commerce activities:
Cross-border e-commerce includes activities of selling goods from Vietnam to other countries
and from other countries to Vietnam through e-commerce platforms such as Amazon, Alibaba, Lazada,
Tiki,… The issues related to these activities are:
First, sellers may seek for ways of tax evasion. For instance, goods may be air-delivered to
buyers using the type of carry-on luggage or checked baggage and this way makes the goods subject
for tax exemption; another way is to send purchased goods in the form of gifts, etc. These
inappropriate acts cause unfairness to businesses whose imported goods are subject to different types
of taxes like import tax, VAT,…
Second, the method applied to levy taxes on services and goods from abroad into Vietnam is
the tax withholding method [7]. For a buyer who is an organization, Circular 103/2014/TT-BTC will
be applied to levy foreign contractor tax and require the buyer to pay that tax. For a buyer who is an
individual, the payment cash flow of this individual will have to be managed to require him to pay tax
for the seller abroad. Clause 3- Article 27 of the Law on Tax Administration 2019 stipulates that
“commercial banks have the responsibilities for withholding and paying tax on behalf of foreign
organizations and individuals conducting e-commerce business and having income generates from
Vietnam”. Also, Clause 2-Article 98 of this Law requires the subjects (like commercial banks) who are
responsible for providing information and documents related to tax payment to assist tax agencies in
the process of tax collection. However, the law does not specify when commercial banks should
perform the responsibility of tax withholding and the tax amount to be withheld. Neither does the law
set out any sanction to deal with commercial banks’ failure of performing their responsibility. With the
mentioned inadequacies present in the Law, commercial banks do not have a full legal framework to
carry out what they are obliged to and the governmental agencies do not have legal grounds to compel
the banks to fulfill their obligation.
Third, tax administration for cross-border e-commerce activities requires coordination and
collaboration between country governments. Because, in a lot of cases, goods and services are used
and consumed within the territory of Vietnam while payment takes place outside of Vietnam, so it is
difficult for Vietnamese agencies to oversee comprehensively all these activities for the purpose of
taxation. Therefore, coordination at the country level helps Vietnam to uncover income that falls
within the scope of application of Vietnamese tax law and thereby detect taxpayers as well as the exact
amount of tax they must pay. Currently, Vietnamese law still lacks of regulations concerning such-
mentioned cooperation.
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Fourth, the way that the Law on Tax Administration 2019 penalizes "acts of violating
regulations on providing information related to the determination of tax liability" is not logical, which
is reflected in the two following provisions:
(i) Point đ-Clause 1-Article 141 of the Law inappropriately categorizes the above-mentioned acts
into the group of “acts of violating tax procedures”. Clearly, “acts of violating regulations on providing
information related to the determination of tax liability” do not relate to taxation procedures but to the
legal obligation of providing information about taxpayers to start the taxation procedures. Therefore,
such categorization can be considered inappropriate and affect the internal coherence of the Article.
(ii) The basis to decide whether subjects having the obligation of providing information of
entities carrying e-commerce activities has failed to perform their duty needs further clarification. In
particular, based on Article 98 of the Law, companies providing platforms that facilitate the provision
of goods and services on the internet such as Zalo, Facebook…are also obliged to provide taxpayers’
information. Meanwhile, a clear basis that enables the tax agencies to decide whether a certain
negative act of these companies can be considered a violation of their obligation is absent. For
example, the tax agencies may be hesitant to conclude an act of not providing information within a
time limit or an act of providing insufficient information as a violation of the obligation of providing
taxpayers’ information.
In conclusion, these shortcomings can diminish the applicability of the Law on Tax
Administration 2019 and negatively affect the efficiency in e-commerce tax administration.
4. Recommendations for the improvement of regulations on e-commerce tax administration
This part presents solutions for the inadequacies, which are pointed out in the previous
contents, of the Vietnamese tax administration regulations on e-commerce activities from the
viewpoint of this paper’s authors.
First, the Vietnamese government should enter into bilateral and multilateral agreements with
other countries as a way to cope with the present obstacles in e-commerce taxation regarding tax
collection and taxpayer information collection. These agreements should include the two following
basic contents:
(i) tax agencies of Vietnam should have the right to request foreign commercial banks’
assistance when collecting tax from income generated within the territory of Vietnam. As mentioned
earlier in this paper, there are sale activities that generate income within the territory of Vietnam and
are subject to Vietnamese tax law, but payment for those is not carried through commercial banks in
Vietnam. That is why there is a need for assistance or support from overseas commercial banks. For
example, Mr. A, who is a foreigner living in Vietnam, has used online foreign services and paid with
an international payment card. Obviously, in this case, no commercial banks in Vietnam can
acknowledge those transactions nor provide any information to tax agencies.
(ii) The income of the enterprises creating and providing e-commerce platforms and social
networking sites that facilitates e-commerce should be subject to taxation in any country where these
platforms and sites are in use. As a matter of fact, these enterprises are making high income from
launching advertisements and selling customers’ information to product manufacturers in different
countries. Thus, not only the country in which their headquarter is located but also the countries in
which their sites or platforms are operated should be able to collect income tax from these enterprises.
Accordingly, the countries involved need to have an agreement that decides how to levy tax on the
income of these enterprises and reasonable rates for the amount of tax collected to be shared among
the countries.
Second, in the present circumstances in Vietnam, when the cash flow is not managed
effectively, tax authorities need to come up with a good solution to improve effectiveness when
applying the method of tax withholding for e-commerce tax collection. A possible solution is that tax
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administration regulations should direct e-commerce platforms to require their customers (product
sellers), in the registration process, to provide taxation-related information. Depending on the status of
each seller, a suitable approach will be applied as follows:
(i) For sellers who are organizations, the tax agencies will let them declare and perform their
tax obligations in accordance with the law as a taxpayer.
(ii) For sellers who are individuals, if they can make an assurance that their annual income is
less than 100 million VND/year (this amount is not subject to income tax in Vietnam), then e-
commerce platforms will not collect tax from them and notify the tax agencies. If an individual seller’s
annual income exceeds 100 million VND or does not make any assurance (that his/her income is less
than 100 million/year), the platform that he is trading on will automatically be authorized to collect tax
from his selling activities then return the collected tax to the tax agencies.
This solution should only be applied when cash flow management is not effective, which means
that the government has to prioritize an effective tax collection policy over a fair tax collection policy.
When effective cash flow management is in place, it is necessary to return to a way that can ensure more
fairness, which is to collect tax from each taxpayer rather than from the e-commerce platforms. In that
way, those who violate tax regulations will easily be discovered and handled by tax agencies.
Third, the time limit in which entities responsible for providing information about these e-
commerce activities to tax agencies needs to be specified to help the agencies determine the exact
amount of tax that taxpayers must pay. So any failure to provide information within the time frame can
activate the agencies’ authority to impose penalties on the responsible entities. In fact, Point a-Clause
2-Article 98 of the Law on Tax Administration 2019 has already regulated the obligation of providing
e-commerce activity information but not yet set out a time limit for the obligation to be fulfilled. Also,
this provision at this point in time is only applied to commercial banks. Therefore, to strengthen tax
administration on e-commerce, the scope of application of the provision should be expanded to other
entities, and an appropriate amount of time for information disclosure should be set distinctly for each
type of entity.
Fourth, it will be more logical if Clause 4-Article 98 becomes a sub-content in Clause 2-Article
98 of the Law on Tax Administration in 2019. Clause 4 stipulates that: "Other agencies, organizations,
and individuals related to taxpayers shall provide written information or electronic data of taxpayers
at the request of tax agencies". However, “agencies, organizations, and individuals related to
taxpayers” are indeed the entities responsible for providing information related to e-commerce
activities as mentioned above so they belong to the group of subjects specified in Clause 2 Article 98.
Moreover, the form of information (written documents, electronic data,...) to be provided by each type
of the obliged entities should also be specified clearly in the contents of Article 98.
Fifth, the group of acts in violation of providing information to tax agencies should be
regulated as a separate group with heavier penalties by the Law on Tax Administration 2019. Both the
primary penalty and additional penalty can be applied to this group as follows:
(i) Regarding the primary penalty, the penalty should be 50% of the tax amount that taxpayers
fail to pay. The reason is that the purpose of providing taxpayers' information to tax agencies by
responsible entities is to avoid and limit cases of tax evasion, so a heavy penalty can help ensure these
entities’ coordination with tax agencies.
ii) Regarding additional penalty, suspension of operation in a specific period of time can be
applied in addition to the primary penalty to entities like e-commerce platforms and online service
providers. This penalty helps enhance these entities’ awareness of their obligation to coordinate with
tax agencies in the process of executing tax administration.
In conclusion, the analysis and recommendations given in this paper are from a personal
viewpoint and based on the self-research of the authors. The paper is expected to make a contribution
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to the research of improving tax administration regulations on e-commerce activities and, in general,
ensuring the elements of equality, effectiveness, and transparency of tax law in Vietnam.
REFERENCE
1. David W. Williams (1996), Principle of tax law, Swett & Maxwell Ltd, United Kingdom and Nguyễn Hồng
Thắng (2009), “Vận dụng nguyên tắc đánh thuế trong thực tiễn” [Applying taxation principles in
practice], Tạp chí Phát triển kinh tế [Journal of Economic Development] Vol. 220 –February 2009 (now
known as Tạp chí Nghiên cứu Kinh tế và Kinh doanh Châu Á [Journal of Asian Business and Economic
Studies (JABES)]); Rawls, J.(1971), A theory of Justice, Belknap Press of Harvard University Press -
Cambridge, MA; R.A. Zubrow, R.L. Decker, E.H. Plank (1960), “Financing State and Local Government in
Nevada”, Report of Nevada Legislative Tax Study Group, p. 150-162; Phan Phương Nam (2007), “Vận dụng
nguyên tắc công bằng trong ban hành thuế thu nhập cá nhân” [Applying the principle of fairness in
establishing tax regulations on individual income tax], Tạp chí nghiên cứu lập pháp [Journal of Legislative
Studies] – Vol. 02/2007.
2. European commission (2004), Working document: General tax principles, Common consolidated corporate
tax base working group (CCCTB WG), p. 3,4,5; Surrey, Stanley S. (1958), "Tax Administration in
Underdeveloped Countries", University of Miami Law Review, Vol. 12, No. 2, p.160-161.
3. Carroll Mitchell B [1968], "Evolution of U.S. Treaties to Avoid Double Taxation of Income-Part II",
International Lawyer (ABA), vol. 3, no. 1, p. 129-172.
4. Hochiminh City University of Law (2015), Giáo trình Luật Thuế [Textbook on Tax Law], Hong Duc
Publisher, trang 41-44.
5. See: Circular No.47/2014/TT-BCT issued on 05/12/2014 by the Vietnamese Ministry of Industry and Trade
on “quy định về quản lý website thương mại điện tử” [regulations on e-commerce websites]; Decree
No.52/2013/NĐ-CP issued on 16/5/2013 by the Vietnamese Government on “thương mại điện tử” [e-
commerce activities]
6. Basically, individual residents in Vietnam having e-commerce activities with (including activities other than
e-commerce activities) that exceeds 100 million VND/ year must declare and pay VAT and personal income
tax in accordance with Decree No. 65/2013 / ND-CP of June 27, 2013 and Articles 2, 3, 6 and 7 of Circular
No. 92/2015 / TT-BTC of June 15, 2015 issued by the Ministry of Finance on personal income tax. This
means that individual residents in Vietnam who have the total revenue from all types of business activities in
a year less than VND 100 million do not have to pay these taxes.
7. See: Nhat Minh, “Ngành Thuế chủ động phối hợp để quản lý thuế thương mại điện tử” [Cooperation
between
tax
agencies
and
other
entities
in
e-commerce
tax
administration]:
quan-ly-thue-thuong-mai-dien-tu-75713.aspx accessed on 06/12/2019.
Bibliography
Legal documents:
- Law No.38/2019/QH14 issued on June 13, 2019 on tax administration;
- Decree No.52/2013/NĐ-CP issued on May 16, 2013 on e-commerce activities;
- Decree No.65/2013/NĐ-CP issued on June 27, 2013 detailing articles of the Law on personal income
tax;
- Circular No.47/2014/TT-BCT issued on December 5, 2014 by the Vietnamese Ministry of Industry
and Trade regulating e-commerce websites;
- Circular No.92/2015/TT-BTC issued on June 15, 2015 by Ministry of Finance on VAT and personal
income tax applied to individual residents having business activities and on amendment of tax regulations in
Law No.71/2014/QH13 and Decree No.12/2015/ND-CP.
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Kỷ yếu Hội thảo quốc tế “Thương mại và phân phối” lần 2 năm 2020
Other materials:
- Carroll, Mitchell B [1968], "Evolution of U.S. Treaties to Avoid Double Taxation of Income-Part II",
International Lawyer (ABA), vol. 3, no. 1, p. 129-172;
- David W. Williams (1996), Principle of tax law, Swett & Maxwell Ltd, United Kingdom;
- European commission (2004), Working document: General tax principles, Common consolidated
corporate tax base working group (CCCTB WG);
- Hochiminh City University of Law (2015), Giáo trình Luật Thuế [Textbook on Tax Law], Hong Duc
Publisher.
- Nguyễn Hồng Thắng (2009), “Vận dụng nguyên tắc đánh thuế trong thực tiễn” [Applying taxation
principles in practice], Tạp chí Phát triển kinh tế [Journal of Economic Development] Vol. 220 –February 2009
(now known as Tạp chí Nghiên cứu Kinh tế và Kinh doanh Châu Á [Journal of Asian Business and Economic
Studies (JABES)]);
- Nhat Minh, “Ngành Thuế chủ động phối hợp để quản lý thuế thương mại điện tử” [Cooperation
between tax agencies and other entities in e-commerce tax administration]:
de-quan-ly-thue-thuong-mai-dien-tu-75713.aspx
- Phan Phương Nam (2007), “Vận dụng nguyên tắc công bằng trong ban hành thuế thu nhập cá nhân”
[Applying the principle of fairness in establishing tax regulations on individual income tax], Tạp chí nghiên cứu
lập pháp [Journal of Legislative Studies] – Vol. 02/2007;
- Rawls, J.(1971), A theory of Justice, Belknap Press of Harvard University Press - Cambridge, MA;
- R.A. Zubrow, R.L. Decker, E.H. Plank (1960), “Financing State and Local Government in Nevada”,
Report of Nevada Legislative Tax Study Group;
- Surrey, Stanley S. (1958), "Tax Administration in Underdeveloped Countries", University of Miami
Law Review, Vol. 12, No. 2, p.160-161.
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