Tax management for online business: No loss of revenue, no "revenue on revenue"

From July 1, 2025, e-commerce platforms with payment functions will have to deduct, declare and pay taxes on behalf of individuals and business households according to the provisions of Decree 117/2025/ND-CP/2025/ND-CP. (Photo: MINH PHUONG)

Plugging loopholes in tax management for digital business

In recent years, business activities through e-commerce platforms, social networks, livestreams and digital platforms have developed rapidly, becoming popular distribution channels, bringing in large revenues for millions of individuals and business households. However, most business entities on digital platforms have not fully fulfilled their tax obligations due to the characteristics of anonymous, decentralized and difficult-to-control transactions. This leads to budget losses and creates inequality between online and traditional businesses.

Decree 117/2025/ND-CP was issued to overcome the legal gap in tax management for e-commerce, requiring organizations managing e-commerce platforms with payment functions to deduct, declare and pay taxes arising from sales of goods and provision of services by individuals and business households.

Accordingly, from July 1, 2025, when the transaction is successful and payment is confirmed, the e-commerce platform will deduct tax and declare and pay it to the state budget at the prescribed tax rate.

Specifically, value added tax is calculated as a percentage of revenue: goods are 1%, services are 5%, transportation and services associated with goods are 3%. For personal income tax, the deduction rates are as follows: for resident individuals, goods are 0.5%, services are 2%, transportation and services associated with goods are 1.5%; for non-resident individuals, goods are 1%, services are 5%, transportation and services associated with goods are 2%.

In cases where it is not possible to classify a transaction as a good or a service, the highest tax rate will be applied to ensure correct and sufficient collection. The deduction mechanism at source not only helps improve management efficiency but also minimizes the risk of false declaration or tax evasion by business people.

One of the issues that individuals and businesses are interested in is the regulations related to invoices when e-commerce platforms have deducted and paid taxes on their behalf. The tax authority affirmed that the platform's tax deduction does not change the seller's responsibility to issue invoices. Individuals and businesses still have to issue invoices to customers according to regulations.

However, to avoid duplication of tax obligations, business people do not need to re-declare the revenue that has been deducted and paid by the e-commerce platform. When declaring taxes, individuals and business households need to clearly identify which revenue has been deducted and which has not to avoid paying taxes twice for the same income.

The fact that e-commerce platforms deduct tax for each transaction and make monthly periodic declarations also facilitates the determination of tax obligations, minimizing disputes and problems arising between tax authorities, e-commerce platforms and sellers.

For cancelled or returned transactions of goods and services, Decree 117/2025/ND-CP allows the organization managing the e-commerce platform to offset the previously deducted and paid tax with new transactions. This approach ensures reasonableness, fairness and is consistent with the operational practices of e-commerce platforms.

Distinguish clearly between online business and contract business

At the Online Support Program for individuals and businesses selling through e-commerce platforms and digital platforms organized by the Tax Department, many cases raised difficulties in the process of fulfilling tax obligations. Among them was the case of a business household selling rice online since 2018 suddenly receiving a notice of over 1 billion VND in tax arrears from the tax authority, making the family very confused and puzzled.

Explaining this case, Mr. Mai Son, Deputy Director of the Tax Department ( Ministry of Finance ) affirmed: "It is necessary to clearly distinguish between online business and fixed business households declaring taxes according to the lump-sum method. For online business, the cash flow is transparent, transactions via digital platforms are clear, so the tax authority has a full database to determine revenue and collect additional tax if individuals and business households do not declare or declare insufficiently."

According to Mr. Mai Son, online business will declare and pay taxes based on actual revenue generated each month or quarter, not applying a fixed rate like a business household. Revenue is determined through electronic payment methods, data from e-commerce platforms, banks, e-wallets, etc. From there, the tax authority applies the corresponding tax rate for each industry. Specifically, for commercial activities, the rate is 1.5%, for services, it is 5%, transportation and services related to goods is 3%. For individuals who livestream to sell goods for hire or do affiliate marketing, income is calculated as wages, salaries and must fulfill corresponding tax obligations.

Unlike online business, fixed business households applying the contract method will declare their expected revenue for the whole year. The tax authority will coordinate with the Advisory Council of the commune and ward and base on criteria such as business area, number of employees, electricity and water consumption, sales of previous years, etc. to determine a reasonable contract revenue level. The list of contract households and their revenue levels will be made public before January 20 every year and will be used as the basis for calculating monthly or quarterly taxes.

In case of large fluctuations in revenue, for example, revenue increases or decreases by 50% or more, the business household is responsible for notifying and re-declaring to adjust the lump sum. This adjustment does not have the effect of collecting additional taxes for previous months but is only effective from the time of adjustment, helping taxpayers feel secure in complying with their obligations.

For example, in June, if a household's revenue increases from 50 million VND to 300 million VND, it must declare an adjustment in July. If the revenue decreases sharply the following month, the business household must continue to report to adjust the tax rate according to reality.

Innovating management methods, improving voluntary tax compliance

It can be seen that the implementation of Decree 117/2025/ND-CP is a step in line with the digital transformation trend, both ensuring increased budget revenue and creating conditions for people to fulfill their tax obligations transparently and conveniently. Assigning the responsibility of deduction and payment to e-commerce platforms - the units holding detailed transaction data - will help reduce the procedural burden for millions of small businesses, especially in the context of commercial activities increasingly shifting to the digital environment.

In addition, connecting databases between tax authorities and payment platforms, banks, e-wallets, and e-commerce platforms also contributes to creating a modern, fair tax system, limiting fraud and revenue loss.

However, from a legal perspective, the implementation of the tax deduction mechanism at source via digital platforms, although progressive, also requires specific guidance to ensure feasibility and fairness in practice.

Speaking to Nhan Dan Newspaper reporters, Lawyer Nguyen An Binh (Hanoi Bar Association) said that Decree 117/2025/ND-CP is a suitable step in the context of the Government promoting the completion of digital economic institutions, but it is necessary to clarify the coordination mechanism between e-commerce platforms and sellers in accurately determining the portion of revenue that has been deducted from tax.

“Individuals and business households are still obliged to issue invoices according to regulations, but do not need to re-declare the revenue that has been deducted and paid by the e-commerce platform. However, if there is no transparent reconciliation system between the seller and the platform, the risk of double tax payment is entirely possible. There needs to be an information portal or online lookup tool for businesses to accurately track the taxes deducted for each transaction,” lawyer Nguyen An Binh analyzed.

In addition, lawyer Nguyen An Binh also noted that the current tax calculation is mainly based on a percentage of revenue, without considering costs. This can easily put pressure on households and individuals with low profit margins or new businesses.

“Tax policy should not only focus on collecting the right amount of money but also ensure compliance, especially for micro-enterprises. In the initial implementation phase, lenient policies such as exemption from late payment penalties and quick tax refunds should mistakes arise due to the new system can be considered,” he suggested.

The lawyer also said that, along with a transparent mechanism from tax authorities and e-commerce platforms, raising legal awareness of online sellers is a decisive factor to ensure that Decree 117/2025/ND-CP is implemented effectively and fairly.

The implementation of Decree 117/2025/ND-CP/2025/ND-CP is not only aimed at preventing revenue loss but also affirms the determination to build a fair and modern tax system that keeps up with the trend of digital economic development. During the implementation process, tax authorities need to continue to increase support, promptly resolve problems, and at the same time step up propaganda so that people understand and comply with the policy. Only when taxpayers clearly see their roles and obligations, will the transparency and fairness in tax policy truly be effective.

Source: https://baotuyenquang.com.vn/quan-ly-thue-voi-kinh-doanh-online-khong-that-thu-khong-thu-chong-thu-213874.html