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In a bid to streamline tax collection in the rapidly growing e-commerce sector, Vietnam’s Ministry of Finance (MoF) has proposed new measures requiring e-commerce platforms to deduct and pay VAT and personal income tax on behalf of sellers. The new tax rules will come into effect on April 1, 2025, marking a significant shift in how taxes are collected for online sales.
Under the new draft decree, all online retail platforms are mandated to calculate and remit taxes directly to the government for each transaction made on their platforms. This includes both VAT and personal income tax for sellers, which will be deducted once the buyer’s payment is successfully processed. The tax amounts are calculated as a percentage of the transaction value, with specific rates set for different goods and services.
For VAT, the rates are:
- 1% for goods
- 5% for services
- 3% for transportation and services associated with goods
For personal income tax, the rates are as follows:
- 0.5% for goods (resident individuals)
- 2% for services (resident individuals)
- 1.5% for transportation and associated services (resident individuals)
- 1% for goods (non-resident individuals)
- 5% for services (non-resident individuals)
- 2% for transportation and associated services (non-resident individuals)
In cases where the e-commerce platform cannot determine whether a transaction involves goods or services, the highest applicable tax rate will be used.
Vietnam’s e-commerce market has seen rapid growth, rising from $16.4 billion in 2022 to $25 billion in 2024. However, despite this growth, the tax revenue generated from e-commerce activities remains relatively low, with domestic businesses and foreign sellers without a permanent establishment contributing just 20% of total market revenue.
The MoF has noted that the total tax revenue from e-commerce businesses—comprising both local enterprises and foreign sellers—has increased significantly, growing from VND83 trillion ($3.32 billion) in 2022 to an expected VND116 trillion ($4.64 billion) in 2024. However, tax compliance among business households and individual sellers remains an issue, with many failing to declare or pay taxes as required under existing e-commerce laws.
The proposed tax changes align with global practices, where large international platforms such as eBay, Amazon, and Bestbuy have already been collecting and remitting VAT on behalf of sellers. When a buyer places an order, a provisional tax amount will be added to the payment, and this will be confirmed in the order confirmation email.
The MoF highlighted that countries such as the UK, US, Australia, and Germany have been enforcing similar tax obligations on e-commerce platforms since 2018. In China, in addition to collecting taxes for sellers, tax authorities also require platforms to store transaction and tax data for up to three years.
The Organisation for Economic Co-operation and Development (OECD) has recommended that countries unify tax collection methods, placing the responsibility for calculating and paying taxes on the e-commerce platforms themselves.
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