Vietnam eCommerce platforms against paying sellers' taxes


University of Commerce's Nguyen Tran Hung says it is not easy to tax sellers who operate on multiple digital platforms. — Reuters

HANOI: The Finance Ministry has called for eCommerce platforms to pay tax on behalf of sellers, but online traders insist the suggestion is impractical.

A representative of the Vietnam E-Commerce Association revealed three obstacles in the way of eCommerce platforms that make it impossible to pay tax in the sellers’ stead.

The first obstacle is that eCommerce platforms, in most cases, have little knowledge of all the tax codes and tax rates applicable to the sellers’ items.

The platforms cannot calculate the sellers’ taxes properly without this tax information.

The second obstacle involves the absence of a digital system that enables eCommerce platforms to declare and pay tax on the sellers’ behalf and allows tax authorities to check whether a specific transaction generates revenues.

The third obstacle centres around the payment method that is preferred by the buyers in Vietnam – cash on delivery.

Buyers paying in cash make it difficult for eCommerce platforms to monitor the revenues realised by the sellers, adding complexity to tax calculation.

Nguyen Tran Hung, head of the Economic Information Systems and E-Commerce Faculty at the University of Commerce, remarked that it is not easy to tax sellers who operate on multiple digital platforms.

If the sellers use sale management software on those platforms, the platforms could rely on revenue data stored in the software to calculate sellers’ taxes.

Otherwise, tax authorities must make it mandatory for the sellers to disclose their data to the platforms to enable tax calculation.

“If the sellers do not use sale management software, data sharing needs to be made mandatory to enable tax calculation,” said Hung.

According to Hung’s suggestion, data disclosure should include the sellers’ revenue, profit, number of transactions and items sold to help eCommerce platforms monitor sellers’ cash flows more closely.

Bui Ngoc Tuan, deputy director of the Tax Advisory Service at Deloitte Vietnam, held that tax deduction at source is only possible as long as eCommerce platforms are given the authority to collect tax from the sellers.

The deputy director called for a digital system that allows eCommerce platforms to monitor the sellers’ sales on a real-time basis to check their taxable income better.

He also urged tax authorities to tighten the legal framework to prevent new tax avoidance and evasion practices.

Nguyen Minh Cuong, chief economist of the Asian Development Bank, shared Tuan’s view, saying that digital technology holds the key to effective eCommerce taxation.

He took the search engine for tax classification as an example.

The engine enables tax authorities to quickly detect fraudsters online, effectively curbing illegal practices among eCommerce taxpayers.

He also said Vietnam could learn from South Korea’s experience before developing its eCommerce taxation.

South Korea has established an independent department in charge of eCommerce tax, tasked with collecting and analysing revenue data declared by eCommerce enterprises and imposing fines on those involved in tax frauds.

On Dec 15, 2022, the General Department of Taxation launched a national portal through which eCommerce taxpayers are required to disclose their data to the tax authority.

By Feb 13, 258 eCommerce platforms, 14,883 organisations and 53,212 individuals had registered on the portal to comply with the requirement. — Viet Nam News/ANN

Vietnam , ecommerce , platforms , sellers , taxes , collection

   

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