Modernizing tax administration for e-commerce activities in Vietnam

Cross-border e-commerce platforms bring great benefits to Vietnamese export enterprises. (Photo: HA ANH)

However, with the growth considered the fastest in Southeast Asia, it also poses new, not small, challenges for tax management.

That is the ability to fully manage revenue sources and taxpayers, apply modern, effective management, in accordance with international practices on the principle of risk-based compliance management on the basis of large e-commerce databases built from tax management databases and state management databases on e-commerce from relevant ministries and branches.

In recent times, the General Department of Taxation has made efforts to implement many solutions to strengthen tax management for domestic and cross-border e-commerce activities. The General Department of Taxation has drastically implemented short-term and long-term measures and solutions according to its functions and tasks to each tax agency and each tax officer to strengthen tax management for e-commerce activities such as: advising the Government and submitting to the National Assembly to promulgate a number of legal documents on tax to consolidate the legal basis for tax management for e-commerce activities, enhancing the responsibility of ministries, branches, e-commerce platform owners, foreign suppliers and their partners in Vietnam. Organizing propaganda and supporting taxpayers in many diverse and effective forms, contributing to spreading the State's policies on developing healthy, competitive and sustainable e-commerce on the basis of compliance with state laws.

In addition, the General Department of Taxation has deployed information technology applications to facilitate organizations and individuals doing e-commerce business to carry out tax procedures electronically, ensuring level 4.0; in which, the Electronic Information Portal for foreign suppliers has been officially put into operation to support foreign suppliers to be able to register for tax, declare and pay taxes directly from anywhere in the world . Up to now, 94 foreign suppliers have declared and paid taxes with the tax amount of over 14.5 trillion VND. Building and officially operating the e-commerce database collected from many information sources according to regulations. The e-commerce database is centralized at the General Department of Taxation to support local tax authorities in exploiting and using it in tax management for e-commerce activities.

Directing the implementation of inspection and examination work at tax authorities at all levels, focusing on groups of taxpayers with activities related to the field of e-commerce and digital platform business to prevent revenue loss and enhance awareness of tax law compliance of organizations and individuals doing e-commerce business; Carrying out international cooperation activities with tax authorities of countries and international organizations (OECD, IMF, WB, ADB, JICA, ...) in researching and sharing experiences on tax management for e-commerce activities. Participating in researching, developing and preparing contents and procedures for signing the Multilateral Agreement on profit allocation for digital service business activities (MLC).

Regarding the coordination of ministries and branches, the General Department of Taxation said that in order to strengthen state management in general and tax management of e-commerce activities in particular, the Ministry of Finance (General Department of Taxation) has been closely coordinating with relevant state management agencies in the field of e-commerce through signing coordination agreements, advising the Government to issue Directive No. 18/CT-TTg dated May 30, 2023 on promoting connection and data sharing to serve e-commerce development, combat tax loss, and ensure monetary security.

Accordingly, the Ministry of Public Security and the Ministry of Finance (General Department of Taxation) have completed the connection and sharing of the national population database to conduct a synchronous review of the national population database with the tax code database. To date, if calculated based on the number of tax codes excluding dependents and tax codes without tax obligations or without paper information (ID card, CCCD), over 90% of the review and synchronization of the Ministry of Public Security's database with the tax code database has been completed to implement the conversion of using CCCD as a tax code according to regulations. The Ministry of Finance (General Department of Taxation) has completed the integration of the use of electronic identification accounts (VneID) with tax management platforms of tax authorities. As a result, there have been 663,157 connections so far, with a total of 400,791 citizen accesses.

The Ministry of Industry and Trade, the Ministry of Information and Communications and the State Bank have initially completed the sharing of databases with the General Department of Taxation, including: data of 929 websites providing e-commerce services; data of 130 organizations operating in the fields of telecommunications, advertising, radio and television; data on payment accounts of over 9 million organizations and over 121 million individuals at 96 commercial banks. All 5 ministries and branches: the Ministry of Finance, the Ministry of Public Security, the Ministry of Industry and Trade, the Ministry of Information and Communications, and the State Bank have completed the agreement on a detailed plan to implement Directive 18/CT-TTg on connecting and sharing data electronically, regularly, ensuring timely support for tax management of e-commerce activities.

Up to now, the Tax Industry has approached e-commerce activities according to platforms with e-commerce activities to apply appropriate tax management measures including 8 groups of platforms: e-commerce trading floors; e-commerce websites/applications, social networking platforms, transportation, shipping and delivery platforms; agent platforms, subscription platforms, advertising platforms, and application store platforms.

In addition, the tax sector also classifies taxpayers participating in e-commerce activities into two main groups: providing domestic goods and services (including: platform owners with e-commerce activities, organizations and individuals providing domestic goods and services through e-commerce trading floors, social networks and other platforms); providing cross-border goods and services (including: foreign suppliers without a permanent establishment in Vietnam conducting e-commerce business activities, business based on digital platforms with organizations and individuals in Vietnam; Vietnamese organizations and individuals with income from posting products and digital information content on foreign platforms; organizations and individuals providing cross-border goods and services through e-commerce trading floors and other platforms).

In the coming time, tax law policies and specialized law policies need to be strengthened, amended and supplemented to cover all e-commerce activities, while creating favorable conditions for tax declaration, payment and use of electronic invoices for organizations and individuals doing e-commerce business. Regarding strengthening propaganda and support, the General Department of Taxation - Ministry of Finance continues to implement propaganda and support programs for taxpayers that have been effective in the past, such as propaganda on mass media (newspapers, radio, television, etc.), organizing direct dialogues with taxpayers, organizing 24/7 hotlines, implementing communications through embassies, foreign business associations in Vietnam and large tax consulting units.

In addition, in the coming time, in order to further promote propaganda to taxpayers with e-commerce business activities, the General Department of Taxation will issue an open letter to organizations and individuals doing e-commerce business on tax declaration and payment to raise understanding, awareness and self-awareness in complying with tax laws. At the same time, to strengthen tax management for foreign suppliers, the General Department of Taxation will coordinate with the Vietnam e-commerce trading floor to guide foreign organizations and individuals doing business through the floor to register for tax, declare and pay taxes on the General Department of Taxation's e-commerce portal.

Regarding strengthening the e-commerce database and applying risk management, the tax sector continues to review and enrich the e-commerce database from information sources from ministries, branches; from business organizations in the e-commerce ecosystem. Based on the collected data, the tax sector continues to organize data, analyze risks, including using machine learning methods - applying artificial intelligence (AI) to process data, issue warnings and deploy appropriate tax management measures for each subject with e-commerce business activities according to the principle of risk management.

Regarding the modernization of tax administration, the tax sector continues to modernize the management of tax collection and payment, especially for taxpayers who are business households and business individuals, in the direction of creating maximum favorable conditions for the implementation of tax declaration and payment obligations electronically.

Regarding coordination between ministries and branches, the General Department of Taxation and the Ministry of Finance will continue to promote coordination, connection and information sharing between ministries and branches within the framework of implementing Directive 18/CT-TTg on promoting connection and data sharing to serve e-commerce development, combat tax loss, and ensure monetary security to strengthen state management of e-commerce activities in general and tax management in particular.

Source