1. Introduction

a) The Booming Landscape of Online Sales Today

The strong development of technology

• The popularization of the internet and smartphones: Affordable and accessible internet connectivity has created conditions for individuals, especially the younger generation, to participate in online shopping activities.
• The development of e-commerce platforms: There are more and more reputable e-commerce platforms such as Shopee, Lazada, Tiki,… Along with that is the diversification of online sales channels such as social networks (Facebook, Instagram,…), live streaming,…
• The development of online payment methods: Online payment becomes safer and faster with electronic wallets such as Momo, ZaloPay,…

The demand for online shopping is increasing

• Changing consumer shopping habits: Consumers are increasingly favoring online shopping for its convenience, speed, and diverse range of products.
• Product diversity and competitive prices: E-commerce platforms provide a rich and diverse source of products at competitive prices compared to traditional shopping.
• Promotions and attractive incentives: E-commerce platforms often launch promotions, discounts, free shipping to attract shoppers.

Besides the advantages, online selling also poses some challenges such as:

• Counterfeit goods, fake goods, low-quality products: Controlling product quality in the online environment remains difficult, leading to the prevalence of counterfeit and fake goods.
• Customer service is not professional: Some businesses do not focus on investing in customer service, leading to dissatisfaction for shoppers.
• Payment and refund policies are not flexible: Some e-commerce platforms have complex payment and refund regulations, causing inconvenience for buyers.

However, with the continuous development of technology and the efforts of businesses, online sales are predicted to continue to boom in the future, becoming the main shopping channel for Vietnamese consumers.

b) The importance of tax compliance

Compliance with the law and demonstrating the responsibility of citizens: As individuals/businesses engaged in online business, the obligation to pay personal income tax (PIT) and value-added tax (VAT) is mandatory according to the regulations of Vietnamese law. At the same time, it demonstrates respect for the law, the sense of responsibility of online sellers towards the community and society.

Protecting Rights and Legitimate Interests: By fulfilling tax obligations promptly and accurately, online sellers can enjoy the full range of rights and benefits offered by the government, including:

• Participating in support programs, encouraging business development.
• Accessing preferential loan sources from banks.
• Minimizing the risk of tax penalties and fines for violating tax regulations.

Contributing to Community and National Development: Revenue generated from PIT and VAT contributes to the state budget, which is utilized for investments in important sectors such as education, healthcare, national security, transportation, and infrastructure. Timely tax compliance by each online  seller contributes to building a strong financial resource for the country, promoting economic and social development, and improving the quality of life for citizens.

Enhancing Competitiveness and Business development: Fulfilling tax obligations promptly and accurately helps online sellers transparentize their business operations, projecting an image of a trustworthy and professional enterprise. build a reputable and professional image for the business. As a result, online sellers can attract more potential customers, expand the market, and promote business development.

c) Benefits of Timely Tax Compliance for online sellers

Avoidance of Penalties

• According to Vietnamese tax regulations, online sellers are liable to pay PIT and VAT if their annual online business revenue is 100 million dong or more per year.
• Failure to pay taxes on time will result in penalties as per legal provisions, including fines, tax recovery, and interest surcharges.
• Being penalized for taxes can affect the reputation and business operations of online sellers.

Enhanced Reputation and Brand Image:

• Paying taxes on time demonstrates the legal compliance and responsibility of online sellers to the community.
• This contributes to building a strong reputation and brand image, creating customer trust.
• When customers are aware of an online seller’s tax compliance, they are more likely to make purchases with confidence.

Enjoying the benefits of the policy

• The Vietnamese government offers preferential policies for businesses and individuals who comply with tax regulations, including tax reductions and loan support.
• Utilizing these benefits can help online sellers save costs and increase profits.

  2. Types of Taxes Applicable to online sellers

Business Registration Fee

• Applicable to online activities based on the scale and business category.
• The business registration fee structure varies across localities.
• Online sellers are required to pay the business registration fee annually.

Personal Income Tax (PIT)

• Applicable to profits generated from an individual’s online business activities.
• The PIT rate is progressive, ranging from 5% to 35% depending on the income level.
• Online sellers with an annual income of VND 100 million or more are obligated to file and pay PIT.
• Online sellers are required to pay PIT on a periodic basis (monthly, quarterly, or annually).

Value-Added Tax (VAT)

• Applicable to revenue from the sale of goods and services by online sellers.
• The current VAT rate is 10%, with certain exceptions enjoying a reduced VAT rate of 5%.
• Online sellers with an annual revenue of VND 100 million or more are required to declare and pay VAT.
• Online sellers are required to pay VAT on a periodic basis (monthly, quarterly).

In addition, online sellers may also be liable for other taxes and fees depending on their specific business activities, such as:

• Corporate Income Tax (CIT): Applicable to online businesses.
• Extraordinary Income Tax: Applicable to sudden or unusual income gains of a business.
• Property Tax: Applicable to the property value of a business.
• Road Use Fee: Applicable to businesses involved in transporting goods by motor vehicles.
• Environmental protection fee: Applicable to businesses engaging in activities that cause environmental pollution.

 3. Instructions for tax declaration and payment

Determining Business Structure

• Individual Business: Applicable to PIT and VAT.
• Businesses: Applicable to CIT, VAT, business registration fee, and other applicable taxes and fees.

Preparing Tax declaration Documents

• General Documents:
  • Personal identification documents (ID card)
  • Business license (for Businesses)
  • Invoices and supporting documents related to business activities
  • Accounting books (for Businesses)

• VAT Tax declaration Documents:
  • Standard VAT declaration form
  • VAT journal
  • Output and input VAT invoices

• PIT Tax declaration Documents:
  • Standard PIT declaration form
  • PIT journal
  • Invoices and supporting documents related to income

Tax declaration 

• Online sellers can declare taxes online through the General Department of Taxation’s website (https://thuedientu.gdt.gov.vn/) or use tax declaration software.
• Fill out the tax declaration form accurately and completely following the instructions.

Tax Payment

• After declaring taxes, online sellers can pay taxes online through banks or directly at the tax authority.
• Retain all invoices and supporting documents related to tax payments.

Below are some notes when declaring and paying taxes for online sellers:

• Declare and pay taxes on time to avoid penalties.
• Retain all invoices and supporting documents related to business activities and tax payments.
• If you encounter difficulties in declaring and paying taxes, consult a tax advisor.