Worries remain over how tax agencies will collect tax from overseas companies that do not have a base in Vietnam. (Photo: baocongthuong.vn)Hanoi (VNS/VNA) - The passing of the amended Law on Tax Management bythe National Assembly is expected to improve the taxation on e-commerceactivities.
The amended law, which was passed on June 13 at the 14th National Assembly’sseventh meeting, will come into effect on July 1, 2020.
Under the new rule, the Ministry of Industry and Trade is required to work withthe Ministry of Finance to provide data and relevant information onorganisations and individuals partaking in e-commerce activities.
The State Bank of Vietnam (SBV) is obliged to develop a nationwide e-paymentsystem for e-commerce platforms while strengthening its supervision overelectronic cross-border trade.
Commercial banks are bound to deduce tax for overseas organisations andindividuals that make incomes from conducting e-commerce activities in Vietnam.
According to Ta Thi Phuong Lan, the General Tax Department’s deputy director oftax management for households and small- and medium-sized enterprises, theimplementation of the new rule requires tight co-operation between banks,ministries, businesses and organisations.
The implementation process would become more complicated for some of thestakeholders, she said, adding banks would have to change their data managementto provide required information for tax agencies.
One way to avoid the tax levy for e-commerce organisations and individuals wasto use cash, which often makes it difficult for tax agencies because sellersdon’t need to issue bills, Lan said.
But those subjects were not invisible to the market regulators as they stillhad something else that’s “physical” such as locations and warehouses, shesaid.
The use of electronic bills would be the way to enhance the tax managementsystem, the official said.
Regarding the operation of some foreign organisations and individuals in Vietnam,Lan said tax agencies would work with those subjects’ representative offices inthe country.
Some foreign organisations have brought huge profits to Vietnamese individualsbut they have not set up offices in the country.
Tax agencies would work with local businesses, through which thoseorganisations cooperate to do business in Vietnam, and commercial banks to keeptrack on those organisations’ earnings, she said.
According to Pham Dat, general director of the electronic cross-border tradeplatform Vietnam Fado JSC, tax-paying procedures should be simplified fore-commerce businesses so they can cut costs.
“It is very important because a strict tax policy and high tax rates willtackle the development of the digital economy, create wrongdoings among bothbusinesses and market regulators such as corruption and bribery, and encouragebusinesses to seek easier solutions like tax evasion,” Dat told local media.
Foreign firms without a local office are willing to pay tax, Dat said. Butcomplicated procedures had forced buyers to seek other sources of supply thatare easier and even illegal to buy products from overseas sellers.
Another problem was that foreign businesses were not allowed to receivepayments directly from Vietnamese individual buyers so Fado had to collect cashpayments for those firms and transfer the money to sellers, he said.
As Vietnam has signed and committed to many multilateral trade agreements,simplifying taxation procedures for the e-commerce sector may help the Statecollect a large amount of money, Dat added.
“We should build a cross-border e-commerce data centre and ask all e-commerceplatforms to settle payments via that centre so the market regulators are ableto check the cashflow and increase tax collection,” he said. - VNS/VNA
VNA
