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Vietnam’s government has announced a landmark regulation under Decree No. 117/2025/NĐ-CP, requiring all e-commerce platforms operating within the country to withhold and remit Value-Added Tax (VAT) and Personal Income Tax (PIT) on behalf of individual and household sellers, effective from July 1, 2025. This regulatory shift underscores Vietnam’s commitment to strengthening tax compliance in its rapidly growing digital economy.
Scope and Applicability
The new decree targets both domestic and foreign e-commerce platforms that facilitate direct payments to sellers, placing the onus of tax collection squarely on these intermediaries. Taxes are to be withheld at the transaction’s successful payment point, mandating platforms to upgrade their systems and operational workflows to meet these requirements by the enforcement date.
Withholding Tax Rates
Vietnam differentiates withholding tax rates based on the seller’s residency and type of goods or services sold:
- For Domestic Sellers:
- Goods: 0.5% PIT
- Services: 2% PIT
- Transport & related services: 1.5% PIT
- For Foreign (Non-Resident) Sellers:
- Goods: 1% PIT
- Services: 5% PIT
- Transport & related services: 2% PIT
VAT withholding rates are set at 1% for goods, 5% for services, and 3% for transport and related services. Monthly tax declaration and reconciliation mechanisms are also stipulated, with provisions for adjustments due to cancellations or returns.
Vietnam’s VAT Landscape
Vietnam currently applies a standard VAT rate of 10% to most goods and services, with reduced rates of 5% on essential items and zero rating for exports. The decree aligns VAT obligations with the evolving digital marketplace, requiring cross-border sellers to potentially register for VAT based on transaction types.
Implications for E-Commerce and Tax Compliance
Decree 117 represents a pivotal step toward formalizing tax collection within Vietnam’s digital economy, addressing the historically challenging issue of tax evasion in e-commerce. By delegating withholding responsibilities to platforms, Vietnam aims to enhance transparency, streamline tax administration, and ensure fair tax treatment between traditional and online sellers.
For multinational companies and digital platforms, this regulatory development demands swift compliance action, including system upgrades and revised tax reporting procedures. Early adaptation will be critical to avoid penalties and foster smoother operations in Vietnam’s burgeoning e-commerce landscape.
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