The tax authority is cracking down on tax evasion in the live streaming industry

Live streaming sales have taken the e-commerce world by storm, generating impressive revenues that other sales channels can only dream of. However, as this trend increases, so does the problem of tax evasion. Tax regulators will crack down on tax evasion in the booming live streaming industry.

The first live streaming sales in Vietnam took place in 2016 using the live streaming features of YouTube and Facebook. It quickly gained popularity, and e-commerce platforms such as Shopee, Lazada, Sendo, and Tiki followed suit. In 2022, the arrival of TikTok Shop sent shockwaves through the online retail community. Now users can interact, place orders, make payments and receive deliveries, all within the app without any hassle.

Notable livestreaming numbers include Ha Linh, who generated an estimated VND20 billion ($785,680) in sales during her first TikTok livestream on March 15, 2023, with a peak viewership of 80,000 people. Other famous names include Pham Thoai, Hang Du Muc, Quyen Leo Daily and Pew Pew. Quyen Leo’s channel set a record in early May, earning over VND100 billion after 17 hours of uninterrupted live broadcasting, surpassing its own record of VND72 billion set in March.

This trend has spread beyond small and medium-sized businesses, with even the largest brands joining the live streaming bandwagon. In late 2023, traders at Ben Thanh Market invited celebrities to livestream with their stalls, which generated over 18,200 orders in just five days. According to the Vietnam E-Commerce Association, there are an average of 2.5 million live selling sessions per month from over 50,000 sellers.

Live selling has become a popular and profitable e-commerce channel, generating significant revenues for both companies and individuals. However, managing and collecting taxes in this dynamic and decentralized sector poses unique challenges for tax authorities.

According to the regulations, online sellers are obliged to pay goods and services tax (VAT) and personal income tax (PIT) if their annual revenues exceed VND 100 million. People earning income from live broadcasts must pay PIT ranging from 5 to 35 percent of their income. If a commission is paid to an entrepreneur, he or she must file and pay 7%. tax, including 5 percent VAT and 2 percent PIT.

This is the latest time the tax industry has monitored individuals whose income comes from live streaming sales, while also reviewing organizations’ payments to high-profile streamers who helped the organizations with live streaming sales. The Ministry of Finance said the industry had made significant progress in tackling tax evasion in live sales. More than 543 companies and 21,616 individuals were identified and assessed for additional taxes, generating additional tax revenues worth VND2.9 trillion.

To effectively combat tax evasion in live streaming sales, tax authorities in Vietnam are implementing a number of innovative strategies, including digital enterprise mapping, electronic portals for cross-border platforms, and e-commerce portals.

From March 2022, the tax authority operates electronic portals for foreign service providers to facilitate registration, tax filing and payments. So far, about 96 foreign service providers have paid over VND 4,000 billion through the portal. Similarly, from December 2022, an e-commerce portal was launched, through which individuals and companies can fulfill their tax obligations.

Deputy Chief Mai Son of the General Department of Taxation said tax authorities recognize that live streaming sales constitute a new form of commerce and that traditional approaches to tax management may need to be adjusted. The sector will support entrepreneurs in registering to pay tax in accordance with the current regulation; however, severe penalties will be imposed on those who deliberately evade taxes in the sector.

First of all, many people earning significant income from live streaming sales have voluntarily registered for tax purposes, filed tax returns and paid taxes amounting to billions of Vietnamese dong. This demonstrates a growing awareness of tax obligations among live streamers and a willingness to contribute to the tax system.

On the other hand, the sector has cooperated with commercial banks to verify the income of many people who do not want to pay taxes. The tax sector will instruct violators to register and pay fines.

According to the leader of the General Department of Taxation, the tax sector is currently cooperating with the Ministry of Industry and Trade, the Ministry of Information and Communication, the Ministry of Public Security and the State Bank of Vietnam to exchange management data.

In particular, the Ministry of Industry and Trade provides information on people and companies operating on e-commerce platforms across the country, not only those directly live streaming, but also suppliers. The Ministry of Information and Communication provides links to the live broadcast.

According to the General Department of Taxation, revenue cannot be determined immediately after the live broadcast, but only after successful implementation. In the past, the sites shared data from over 900 websites and nearly 300 e-commerce platform applications to conduct reviews and strengthen tax management in this area.

Director Nguyen Nam Binh of the Ho Chi Minh City Tax Department confirmed that improving tax management and combating tax evasion in e-commerce activities is one of the key tasks of the city’s tax sector in 2024. To achieve this goal, the tax sector will focus on implementing comprehensive reviews and audits of tax returns, tax payments and the use of e-invoices by organizations, households and individuals engaged in e-commerce, e-commerce platforms, affiliate marketing, digital content delivery and advertising and software revenue generation. This will be particularly focused on organizations and individuals who conduct online businesses, live sales of goods and services,

Author: Khanh Chau – translated by Dan Thuy