E-commerce Platform Tax Management: Clearly Defined Responsibilities for Tax Deduction and Payment

The draft decree focuses on defining the responsibility of e-commerce platform management organizations to deduct and pay taxes on behalf of household businesses and individual businesses.

Applicable entities include:

• Household businesses, resident individuals, and non-resident individuals engaged in business activities on e-commerce platforms and other digital economic activities.
• Organizations that manage e-commerce transaction platforms, organizations that manage digital platforms with payment functions.
• Other organizations engaged in digital economic activities.

Scope of responsibility:

The draft decree specifically stipulates the scope of responsibility for tax deduction and payment on behalf of organizations managing e-commerce transaction platforms, organizations managing digital platforms with payment functions domestically and internationally, as well as other organizations engaged in digital economic activities.

Implementation method:

The draft guides how to deduct, pay taxes on behalf of, and declare the deducted tax amounts for household businesses and individual businesses. At the same time, it stipulates the documents and procedures for tax declaration, tax payment, and tax refund for household businesses and individuals not subject to tax deduction and payment on their behalf.

E-commerce Platform Tax Management: Responsibilities of Platform Management Organizations

Notably, the draft decree defines the responsibility of e-commerce platform management organizations to deduct and pay taxes on behalf of household businesses and individual businesses.

VAT: These organizations are responsible for deducting and paying VAT on behalf of household businesses and resident individuals on revenue generated in Vietnam.

PIT: For non-resident individuals doing business on e-commerce platforms, platform management organizations will deduct and pay personal income tax on their behalf for transactions providing goods and services that generate revenue in Vietnam.

Time and tax deduction rate:

• The tax deduction time is determined before the e-commerce platform management organization transfers payment from the buyer to the household business or individual business.
• The deducted tax amount is determined based on the percentage of revenue from each completed transaction.

VAT rates:

• Goods: 1%
• Services: 5%
• Transportation or services attached to goods: 3%

PIT rates:

• Resident individuals:
  
  • Goods: 0.5%
  • Services: 2%
  • Transportation or services attached to goods: 1.5%
• Non-resident individuals:
  
  • Goods: 1%
  • Services: 5%
  • Transportation or services attached to goods: 2%

E-commerce Platform Tax Management: Declaration and Payment

• Method of declaration and payment: E-commerce platform management organizations will declare the deducted tax amount monthly in accordance with tax management laws.
• Tax code: Domestic organizations will be assigned a separate tax code for declaring and paying taxes on behalf of others. For foreign organizations, a tax code will be issued similar to the regulations for foreign suppliers.
• Declaration dossier: Includes the tax deduction declaration of the household business or individual business and a detailed list of deducted tax amounts.

E-commerce Platform Tax Management: Information Provision Responsibility

E-commerce platform management organizations are responsible for providing information about household businesses and individual businesses as required by tax authorities. These organizations must also register to use electronic tax deduction certificates, issue tax deduction certificates to household businesses and individual businesses electronically, and store business transaction data in accordance with tax management laws.

E-commerce Platform Tax Management: Tax Obligations of Household Businesses and Individuals

For household businesses and individual businesses not subject to tax deduction and payment on their behalf, the draft decree stipulates the direct fulfillment of tax obligations, including VAT, personal income tax, and other levies. Tax declaration can be done monthly or on each occurrence, depending on the form and frequency of business. Household businesses and individual businesses can register, declare, and pay taxes through the General Department of Taxation’s e-portal.

Conclusion

This draft decree is being reviewed by the Ministry of Finance before being submitted to the Government for promulgation. If passed, the decree will have a strong impact on tax management in the e-commerce sector, contributing to increased transparency and efficiency in tax collection for digital business activities.