The HCM City Tax Department plans to continue to collect taxes from online businesses that use Facebook and other social media sites.

Advertisement for sneakers on a Facebok page. 

The collection is to ensure a fair business environment in which all businesses must fulfill tax obligations, according to the department.

The agency last year contacted more than 14,500 online retailers, including Facebook accounts, demanding payment of tax for businesses operating on the social network.

Of the figure, some 3,990 cases worked with the agency and declared tax.

Facebook, Viet Nam’s most popular social network with over 52 million active accounts, is also used as an e-commerce platform, which tax authorities have had difficulty managing.

According to the department, e-commerce activities on Facebook that have regular business must declare tax and pay tax in accordance with the law.

Experts said it is difficult to tax individuals and organisations on the social network because most sales are made in cash.

Facebook is used for many purposes, including consultation, marketing and retailing of products and services. If Facebook sellers consider their work as seasonal, it is not taxed under current law.

Last year, the HCM City Tax Department announced a tax collection plan for the e-commerce business.

Individuals and organisations selling goods over the internet with annual revenue of more than VND100 million (US$4,400) must register and declare tax.

Tax obligations consist of licensing tax, value-added tax, personal income tax, excise tax, and environmental protection tax.

Many holders of Facebook accounts do not want to declare or pay taxes since online trading is seen as a seasonal or part-time job. Even large account holders are finding ways to evade taxes.

According to tax officials, account holders have tried many ways to evade taxes. The most common way is to increase cash transactions, set up multiple sales pages, change locations and refuse to accurately declare sales or disclose sales prices.

HCM City’s tax department recently handed a bill of VND9.1 billion ($401,300) to a Facebook retailer in a rare successful attempt to levy sales on social media.

Le Thi Thu Huong, deputy director of the department, said the amount was the biggest ever to be claimed by the department from an online retailer for tax evasion.

Viet Nam imposes a 0.5 per cent income tax and a 1 per cent value added tax on sales of more than VND100 million per year, according to the department. — VNS