Minister of Finance Ho Duc Phoc: Foreign e-commerce corporations have paid thousands of billions of dong in taxes

PV: Dear Minister,e-commerce activitiesRecently, this has become a popular business trend in the world and has hidden risks of tax loss. Could you please tell us how the Ministry of Finance has implemented measures to prevent and combat this activity and what results have been achieved?

Comrade Ho Duc Phuc:E-commerce activities are the conduct of part or all of the process of commercial activities by electronic means connected to the Internet, mobile telecommunications networks or other open networks.

Subjects of e-commerce activities include: Traders, organizations and individuals who set up e-commerce websites to serve their trade promotion activities, sell goods or provide services (owners of e-commerce sales websites); Traders and organizations providing e-commerce services; Traders, organizations and individuals using websites of traders and organizations providing e-commerce services to serve their trade promotion activities, sell goods or provide services (sellers); Traders, organizations and individuals who purchase goods or services on e-commerce sales websites and websites providing e-commerce services (customers); Traders and organizations providing technical infrastructure, logistics services and other support services for e-commerce activities, in addition to traders, organizations and individuals using other network-connected electronic devices to conduct commercial activities.

With the popular trend of e-commerce activities, the Ministry of Finance has researched and implemented many solutions to prevent tax losses. The rapid and explosive development and many new forms of e-commerce in recent times have posed new, not small, challenges for state management agencies.

About propaganda work,Steering CommitteeImplement propaganda and support for taxpayers through mass media; Launch a writing contest on taxes for e-commerce; organize seminars on tax management for e-commerce activities.

Regarding the modernization of tax management: The Ministry of Finance has launched an electronic information portal for foreign suppliers to support foreign suppliers in registering, declaring and paying taxes in Vietnam; has operated an e-commerce information portal to receive information from business organizations and individuals from e-commerce trading floors; has deployed an electronic tax application on a mobile platform (eTax Mobile) to support individual taxpayers in looking up their obligations and paying taxes electronically.

The Ministry of Finance has proactively coordinated with ministries and branches such as the Ministry of Industry and Trade, the Ministry of Information and Communications, the Ministry of Public Security, and the State Bank through coordination agreements and coordination programs to connect and share information and data with the goal of enriching the database for state management in general and tax management in particular for e-commerce activities.

The Ministry has deployed the work of checking and comparing information for a number of taxpayers who are owners of e-commerce trading floors, payment intermediary units, partner companies of foreign suppliers in Vietnam and a number of foreign suppliers without a fixed business establishment in Vietnam.

With the above directions, by the end of October 2023, revenue from e-commerce tends to increase gradually over the years: In 2021, it was 261 billion VND, in 2022 it reached 716 billion VND, equal to 274% of 2021, and in the first 10 months of 2023 it reached 459 billion VND.

To date, 73 foreign suppliers have registered, declared and paid taxes via the e-Tax Portal from many countries and territories such as the United States; Netherlands; Korea; Singapore; Hong Kong; Ireland; Lithuania; Switzerland, Australia, UK, Portugal. These include leading multinational technology and e-commerce companies worldwide with global business operations such as: Meta, Google, Apple, Microsoft, Amazon, TikTok, Samsung... have registered for taxes and declared and paid thousands of billions of VND in taxes. The total amount of taxes paid by foreign suppliers is 11,498 billion VND, of which: 3,478 billion VND in 2022; 8,020 billion VND in 2023.

PV: Minister, what are the current difficulties in managing this activity?

Minister Ho Duc Phoc:There are still difficulties in this management area. Firstly, it is difficult to fully manage revenue sources and taxpayers because in the digital economy, buyers and sellers can connect globally at any time with a fully automatic mechanism without direct contact or a fixed business location; buying and selling methods and transactions are carried out through online means and electronic software connected to the global Internet.

Second, it is difficult to determine the basis for tax calculation. An entity can have many stores on an e-commerce trading floor, and at the same time on many e-commerce trading floors, and at the same time on many social networking sites, so it is very difficult to manage the business revenue of these entities.

Third, in the digital economy, it is difficult to distinguish certain types of income, especially copyrights, service fees or regular goods revenue to serve as the basis for calculating taxes and tax declaration obligations. Fourth, controlling cash flow is also not easy. Along with the development of the digital economy, in addition to cash payments, there are also a variety of non-cash payment methods such as: payment via bank, electronic payment, peer-to-peer payment (P2P), electronic money. The Ministry will coordinate with the Ministry of Industry and Trade, the Ministry of Information and Communications, the Ministry of Public Security, and the State Bank to implement the tasks assigned in Directive 18 of the Prime Minister on promoting data connection between ministries and branches to serve the development of e-commerce, prevent tax losses, and ensure monetary security.

Reporter: It is known that the Ministry of Finance has soon deployed an electronic information portal for foreign suppliers conducting cross-border business activities on digital platforms. Could you please tell us about the benefits and efficiency that the portal brings? In the coming time, what solutions will the Ministry of Finance have to improve management efficiency and prevent tax losses for cross-border business activities based on digital platforms?

Minister Ho Duc Phoc:The above-mentioned tax collection results have affirmed the efforts of the Ministry of Finance in leading and directing the work of preventing e-commerce tax losses. The successful tax collection from foreign suppliers has affirmed economic sovereignty and affirmed Vietnam's position in the process of increasingly deep and wide integration into the world economy. Tax management of cross-border digital business in Vietnam has been directed by not only the Ministry of Finance and the General Department of Taxation but also the entire political system. This also shows that Vietnam's tax policies and tax management are consistent with international practices, ensuring fairness and transparency for corporations and companies around the world when doing business in Vietnam.

In the coming time, the Ministry of Finance will continue to review and urge foreign suppliers with income in Vietnam to register for tax, declare and pay tax via the Electronic Information Portal; require foreign suppliers to provide transaction information in Vietnam, build a database for foreign suppliers, thereby comparing and determining the accuracy of foreign suppliers' revenue declarations.

Monday,The Ministry shall preside over and coordinate with ministries and branches in perfecting and amending tax policies and laws related to e-commerce, reducing administrative procedures, reducing declaration points, strengthening the implementation of solutions for collecting taxes at the source, preventing tax losses, and strictly implementing sanctions for violations of tax and customs. Direct the General Department of Taxation to build a tax management database for e-commerce and digital-based business to apply risk management in tax management on the basis of big data; the deadline for completion is 2023 at the latest. At the same time, coordinate the exchange of international tax information with countries in the region and around the world.

Tuesday,The Ministry will continue to review, evaluate and propose to perfect the legal basis in accordance with practical requirements for managing e-commerce and digital business activities in accordance with international practices so that foreign suppliers can properly comply with their obligations to the Vietnamese State Budget.

Regarding the development of legal policies, the Ministry of Finance has advised and submitted to the Government and the National Assembly a number of legal documents such as: Law on Tax Administration No. 38/2019/QH14, Decree No. 126/2020/ND-CP, Circular No. 80/2021/TT-BTC, Circular No. 40/2021/TT-BTC, Circular No. 100/2021/TT-BTC, Decree 91/2022/ND-CP, which stipulate that foreign suppliers (NCCNN) without a permanent establishment in Vietnam are obliged to directly or authorize tax registration, tax declaration, and tax payment in Vietnam; regulations on the responsibility of e-commerce platforms in providing information of businesses and individuals doing business on the platform to tax authorities; Responsibilities of partner companies in Vietnam of NCCNNs in declaring and paying taxes on behalf of individuals receiving income in Vietnam; Regulations on responsibilities of relevant state agencies.

PV: Thank you, Minister!