Ministry of Finance wants to control Facebook and Google taxes through Napas

The Ministry of Finance wants cross-border services such as Facebook and Google to pay via domestic gateways through the National Payment Joint Stock Company (Napas).

The Ministry of Finance has just proposed that the State Bank coordinate to study this content in order for tax authorities to control the revenue of these services to have a basis to request foreign organizations to deduct tax payments.

In addition, the Ministry of Finance also requested that telecommunications and Internet service providers open official representative offices in Vietnam and declare and pay contractor tax.

The Ministry of Finance wants to control taxes on Facebook and Google through the National Payment Joint Stock Company (Napas).

The reason for making the above proposal, according to the Ministry of Finance, is that the operation of the Internet is a cross-border transaction.

Most foreign network operators are not registered for business and do not have official representative offices in Vietnam.

This is a difficulty for the tax industry in tax management for foreign networks doing business via the Internet.

Currently, Google and Facebook provide online advertising services to the Vietnamese market through two methods.

In the first method, through agents in Vietnam, these businesses will have to fulfill tax obligations according to Vietnamese law when generating revenue.

Thus, this depends on the tax awareness of agents in Vietnam.

The second method is online buying and selling and online payment via credit card or e-wallet which is still not clearly regulated.

However, the service buyer will suffer because there is no invoice so it will not be included in the reasonable cost or the service buyer will self-legalize by buying an invoice from another service.

Thus, when conducting tax audits, it will be difficult to know the true value of the costs paid for online services. In many cases, it is necessary to compare information from multiple sources and trace the actual payment information.

On the other hand, with payment based on the number of paid clicks, determining the advertising revenue of foreign carriers is not easy.

Currently, e-commerce is very developed, however, tax authorities have not effectively managed taxes on this activity.

The reason is that it is necessary to compare information between the buyer's and seller's banks and participate in payment under the condition that they are not direct taxpayers and the network company's bank is also abroad.

The purchasers of services from foreign organizations are individuals, so it is difficult to have a basis to request a deduction of foreign contractor tax when purchasing services.

Therefore, the Ministry of Finance proposed that the State Bank study the requirement that cross-border services must be paid through the Napas gateway and that foreign network operators in Vietnam need to establish a focal point such as opening an official representative office to coordinate more closely with the management agency.

This type has been implemented in European countries, India, and Korea.

At the same time, the Ministry of Finance also proposed to coordinate with relevant agencies to review and amend regulations on handling violations in the field of e-commerce and tax to increase deterrence against organizations and individuals operating in e-commerce business who intentionally evade taxes.

According to TTO