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Vietnam: Taxation of e-commerce transactions, remote digital sales

Vietnam: Taxation of e-commerce transactions

The National Assembly of Vietnam in June 2019 passed a new tax administration law—one that may affect many non-resident enterprises selling goods and services into Vietnam via digital and e-commerce business models.


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There are also new measures that may affect the financial sector because it will be that sector’s duty to identify transactions subject to tax and to collect the tax.

These new rules are effective 1 July 2020.


Historically, the supply of goods and services directly to individuals located in Vietnam by non-resident enterprises (so-called business-to-customer, B2C, transactions) has fallen outside the Vietnamese tax system. The new provisions were introduced to regulate and tax such transactions in an attempt to close certain gaps in the legislative framework.

The method of taxing these arrangements is through new rules applicable to cross-border payment transactions—specifically, payments by individuals (and other entities in Vietnam) to non-resident entities and enterprises that are not registered for tax or that do not declare and pay tax in Vietnam.

The new measures target e-commerce transactions, and specifically the digital economy. The tax collection burden has been imposed on the financial sector which will be required to report and collect taxes from certain transactions. Further, the financial sector will be required to identify which transactions are subject to the new rules.

There are new provisions that impose a reporting and payment obligation on foreign enterprises that have no taxation presence in Vietnam. This is assumed to mean tax registration for the group as a whole, but it is not clear if this is an entity-by-entity requirement. Specifically the law requires that if there are e-commerce activities provided by non-resident suppliers, if there is no permanent establishment, the suppliers must register, declare, and pay tax in Vietnam (or authorize another to complete these duties).

At a minimum, the registration requirement may apply with regard to value added tax (VAT). How the system will be implemented is not yet certain. It is conceivable that a withholding tax of some form could be levied on all target payments, thus resulting in a tax refund process when taxes are not actually due in Vietnam.

Read a July 2019 report [PDF 110 KB] prepared by the KPMG member firm in Vietnam

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