Proposal for cross-border sales platforms without presence in Vietnam to also be taxed

E-commerce platforms and digital technology platforms of foreign enterprises providing goods and services in Vietnam will be subject to tax even if they have no presence.

On the morning of November 22, the Government submitted to the National Assembly the draft Law on Corporate Income Tax (amended). On November 22, authorized by the Prime Minister, Deputy Prime Minister Le Thanh Long presented the draft Law on Corporate Income Tax (CIT), emphasizing that the tax amendment aims to implement the provisions of the law and meet the requirements of international integration.

Amendment of taxpayers and taxable enterprises

In particular, the challenges posed in collecting corporate income tax for multinational companies, especially the restriction of transferring profits from countries and territories with high tax rates to areas with lower tax rates, causing erosion of the tax base and loss of budget revenue. On that basis, the amended law will complete regulations related to taxpayers and taxable income of corporate income. Including regulations on tax-exempt income; determining taxable income of corporate income and tax calculation methods; deductible and non-deductible expenses when determining taxable income; adjusting corporate income tax rates for some groups of subjects accordingly and completing regulations on tax incentives... Accordingly, for taxpayers, the Government proposes to amend and supplement regulations on taxpayers who are foreign enterprises providing goods and services in the form of e-commerce business, business on digital platforms must pay tax on taxable income arising in Vietnam. E-commerce platforms and digital technology platforms of foreign enterprises providing goods and services in Vietnam will be subject to tax.

The amendment and supplement of this regulation aims to contribute to improving policy transparency and facilitating tax management. At the same time, it ensures a solid legal basis for tax collection, payment and management for foreign enterprises providing goods and services to organizations and individuals in Vietnam in the form of e-commerce and digital platform business, in accordance with international practices. Reviewing this content, Chairman of the Finance and Budget Committee Le Quang Manh said that it is necessary to clarify the actual ability to collect corporate income tax for foreign enterprises without a presence in Vietnam in cases where these enterprises sell (supply) goods to Vietnam through transactions on e-commerce platforms.

Carefully assess the ability to collect corporate income tax on cross-border platforms

Because according to practice, for e-commerce, countries only stipulate corporate income tax for foreign service providers; transactions on goods are treated as normal import and export transactions, only indirect taxes are collected, not corporate income tax. Data from the General Department of Taxation also shows that among enterprises paying taxes through the Electronic Information Portal, there are mainly foreign service providers, not goods suppliers. For the case of foreign enterprises doing e-commerce business, doing business on digital platforms with permanent establishments in Vietnam, the draft law stipulates that only the "income arising in Vietnam" portion is taxed. According to the review agency, this may not cover all income that Vietnam has the right to collect, including all income related to that permanent establishment in Vietnam and outside Vietnam as well as income in Vietnam unrelated to that permanent establishment. In addition, the draft law adds provisions on permanent establishments for “e-commerce platforms, digital technology platforms through which foreign enterprises provide goods and services in Vietnam” (“virtual” permanent establishments). The review agency said that many opinions agree that adding this provision will expand the right to tax. However, there are still concerns about the applicability in practice because this is only a provision in domestic law, while the tax treaties that Vietnam has signed with other countries do not have this provision.

Tuoitre.vn

Source: https://tuoitre.vn/de-xuat-nen-tang-ban-hang-xuyen-bien-gioi-khong-hien-dien-o-viet-nam-cung-bi-danh-thue-20241122091803924.htm