Discussing the many complexities surrounding live streaming taxes

What obstacles currently hinder tax collection on e-commerce platforms in Vietnam?

Senior Partner in ASL Law, Nguyen Thi Thuy Chung

Currently, managing taxes related to sales on e-commerce platforms faces many challenges. Tax management is currently based on the self-declaration and self-payment mechanism in accordance with the regulations. As a result, taxpayers, especially those conducting business via social media, do not voluntarily register their business or for tax purposes.

Many individuals and households doing business online conduct transactions in the form of cash payments through freight forwarders. If payments are made through banks, they often use bank accounts that are not registered with the tax authorities.

Some people operate without a fixed location to transact with customers, relying solely on phones or social media accounts such as Facebook and Zalo, and primarily deal in direct delivery and collection of cash. Hence, tax authorities often lack sufficient information about these people to invite them to business meetings or determine their tax obligations.

Determining actual revenue after sessions is often difficult due to the lack of reliable documentation.

What are the differences in management, filing and tax filing for sellers on e-commerce platforms in other countries?

In Germany and France, smart search tools have been developed to identify people doing business online without declaring or paying taxes.

Xpider is used to detect e-commerce websites of German entities and individuals, identify activities that violate tax law and store information for tax audits. Meanwhile, France uses tools such as Copernic Agent, Metacrawler and web scraping to search and collect information from websites and tax databases for computer audits.

Vietnam has implemented a centralized tax management system throughout the country. Unlike the systems in France and Germany, the Vietnamese tax management system offers many functions, including tax registration integration, document management, tax return and settlement processing, national tax settlement, debt management, analysis reporting, evaluation.

Currently, businesses selling goods and providing services in Vietnam are required to issue electronic invoices to buyers, except when goods are transferred internally for further production processes. For individuals and households, issuing an invoice is only mandatory when using the periodic tax return method.

On the other hand, all individuals and companies selling through e-commerce platforms in China must issue paper invoices, electronic invoices or other service documentation to confirm transactions.

Both Vietnam and China have laws requiring the use of electronic tax return systems via the websites of their tax authorities. While both countries have implemented electronic systems, China’s is more complex and comprehensive. China requires all businesses, regardless of size, to issue invoices for every transaction – a regulation that has been in force since 1998. Meanwhile, Vietnam only started implementing its e-invoicing system in 2022 and is still finalizing the technical framework.

How can taxes be collected effectively, especially since the General Department of Taxation recently issued a directive to local tax offices requiring them to step up their management of e-commerce taxation?

To ensure effective tax collection, ASL LAW proposes several measures. The first is the requirement for e-commerce platforms to declare taxes on behalf of individuals and organizations doing business on the platform. Individuals and organizations selling on e-commerce platforms should also issue electronic invoices to consumers for all orders.

The dissemination of information and guidance to the public on tax issues related to e-commerce should be intensified. This includes the role of invoices, taxable entities, tax rates and registration. In addition, tax authorities should issue official documents addressing common concerns related to e-commerce.

Cashless payments should be encouraged to increase transparency of economic transactions, allowing tax authorities to easily monitor and manage sources of income. Implementation of this measure requires support and cooperation of banks with tax authorities. Using data provided by banks, tax authorities can identify individuals and organizations operating on the Internet that have not declared or paid taxes.

Vietnam should also implement new IT applications to make it easier for e-commerce entities to complete tax procedures electronically.

The rapid growth of e-commerce has also led to an increase in counterfeit goods and intellectual property rights (IPR) infringements. How will they be treated under Vietnamese law and how can sellers protect their property rights on e-commerce platforms?

The rapid growth of e-commerce brings with it many business opportunities and raises numerous problems related to counterfeiting, fake products and intellectual property infringements.

Under Vietnamese law, depending on the nature and severity of violations, these actions may be subject to administrative penalties or criminal proceedings. For producing and selling counterfeit goods, sellers can be fined between $400 and $850 for individuals and between $850 and $1,600 for organizations.

If e-commerce platform providers fail to take action in response to illegal activities detected or reported on their platforms, they may be fined between $1,250 and $1,600 and may be liable for additional penalties and remedies provided by law.

Violations may be prosecuted under the Criminal Code of 2015 (amended and supplemented in 2017), including: production or trade in counterfeit goods, which also includes food and food additives.

Offenders face fines, imprisonment, and even the death penalty, as well as a ban on holding certain positions or professions, with possible confiscation of property. Legal entities may be punished with a fine or suspension of their activities, a ban on conducting business, and restrictions on the mobilization of capital.

To protect intellectual property rights on e-commerce platforms, sellers can take a number of measures. It is advisable to use trademarks that have been registered. If the trademark you are using is not protected, you must apply to the Vietnam Intellectual Property Office.

Sellers should also regularly monitor products sold on e-commerce platforms to detect counterfeit goods; report infringements to e-commerce platforms and request removal of infringing products; and submitting complaints to the appropriate authorities in the event of detection of violations by other entities.

E-commerce platforms must also have stricter rules for identifying authentic official stores. For example, in the process of registering as an official store, the e-commerce platform should require sellers, importers or distributors to provide purchase invoices and certificates of origin for their products.

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