Bank accounts of local advertisers to be drained for Facebook and Google tax arrears

Dozens of thousands of local advertisers of Facebook and Google are on edge since the Law on Tax Administration has come into force on July 1.

bank accounts of local advertisers to be drained for facebook and google tax arrears

Facebook and Google have dozens of thousands of advertisers in Vietnam

Under the new tax law, banks are allowed to deduct taxes for cross-border service suppliers on their earnings from Vietnam following Clause 27 of the Law on Tax Administration. That means banks are allowed to take taxes out of the bank accounts of companies which have been making transactions with overseas services suppliers, especially Facebook and Google.

In addition to the local authorised partners, the two tech titans also have dozens of thousands of advertisers who are mainly small- and medium-sized enterprises and individual online vendors. However, only authorised partners have been paying foreign contractor withholding tax for Facebook and Google at the rate of5 per cent. According to a VIR source, there are dozens of authorised partners of Facebook and Google in Vietnam.

The source also revealed that the giants sign about 10 contracts annually with authorised companies with the value of VND200-300 million ($8,700-13,000) each. Calculated with the 5 per cent foreign contractor withholding tax rate, these firms pay about $4,350-6,500 a year in total.

According to Nguyen The Trung, chairman of local tech company DTT Group, every transaction Facebook and Google make in Vietnam are valuable. With global earnings of $55 billion with more than 2.4 billion users, earning about $15-20 from each user. Thus, in Vietnam, with its more than 60 million users, Facebook earned about $1 billion last year. 

“Local tax supervision has yet to be extended to these transactions,” Trung told VIR. “Facebook only pays about one-tenth of the value that authorised partners bring to it in Vietnam, ignoring its tax obligations after thousands of other advertisers.”

The biggest problem is how to supervise the money flows between local individual advertisers and overseas suppliers. Accordingly, as they perform transactions via personal credit cards, the people did not have to pay any tax for the suppliers until now, resulting in great amounts of lost tax revenue for the state for years.

 

With the fresh legislative changes, banks will soon be able to check individuals' bank accounts and deduct taxes from them.

According to market research company ANTS, Facebook and Google currently occupy about 70 per cent of the local advertising market and the proportion is forecast to keep growing in the years ahead. Therefore, to force giants to fulfil their tax duties in Vietnam, the new tax law is necessary.

Article 42 of the new Law on Tax Administration outlines that all cross-border businesses that have earned money from Vietnam have to register a tax account, declare tax, and pay tax.

This means overseas cross-border service suppliers will have to perform their tax obligations directly or by authorising a third party even if they have no representative office in the nation.

The General Department of Taxation is planning to publish the tax codes of all companies on its official website. Once they neglect their tax duty, the authority will automatically deduct the arrears from the bank accounts of partners transferring money to them.

Currently, tax authorities, the State Bank of Vietnam, and other commercial banks have been finishing the draft on standards, conditions, and guidelines for deducting activities compliant with regulations. VIR

Van Anh

Vietnamese businesses burdened with taxes, FIEs at ease with tax exemptions

Vietnamese businesses burdened with taxes, FIEs at ease with tax exemptions

Studies have found that Vietnam’s taxation system offers many incentives to foreign invested enterprises (FIEs), but puts an increasingly heavy burden on Vietnamese enterprises and people.

VEPR urges tax policies for FDI to be revised to prevent tax avoidance and evasion

VEPR urges tax policies for FDI to be revised to prevent tax avoidance and evasion

Vietnam needs to revise tax and land policies for foreign direct investment (FDI) companies to ensure a level playing field for businesses.  

 
 

Other News

.
Vietnam factory activity dips in July as Covid-19 impacts grow
Vietnam factory activity dips in July as Covid-19 impacts grow
BUSINESSicon  03/08/2020 

Despite a drop in output in July, firms remained confident in the 12-month outlook for production.

Vietnamese startups bag millions of US dollars despite COVID-19 pandemic
Vietnamese startups bag millions of US dollars despite COVID-19 pandemic
BUSINESSicon  03/08/2020 

A slew of Vietnamese startups managed to secure millions of US dollars even in the midst of the rapidly escalating COVID-19 pandemic.

Sky-high livestock prices may breach competition law
Sky-high livestock prices may breach competition law
BUSINESSicon  03/08/2020 

Although many livestock companies could face an inspection to ensure they follow through on commitments to cut their prices, the market outlook still looks dreary in spite of the government’s call to stabilise the selling cost of live pigs.

Aligning with trade remedy principles
Aligning with trade remedy principles
BUSINESSicon  03/08/2020 

The EU-Vietnam Free Agreement (EVFTA) is a giant leap for Vietnam in international integration.

Electricity of Vietnam suggests not to extend deadline for wind farm FiT
Electricity of Vietnam suggests not to extend deadline for wind farm FiT
BUSINESSicon  03/08/2020 

In order to ensure transparency and stability in the selling price of wind power, EVN opposes the Ministry of Industry and Trade's proposal to extend the deadline on the current feed-in tariff (FiT) scheme for wind power projects

Ministry seeks to further open petroleum retail market
Ministry seeks to further open petroleum retail market
BUSINESSicon  03/08/2020 

The Ministry of Industry and Trade has called for allowing all foreign investors to further participate in the petroleum retail market.

Shares to correct on worries of virus surge
Shares to correct on worries of virus surge
BUSINESSicon  03/08/2020 

 Vietnamese shares may continue to fall this week as a spike in fresh coronavirus cases fuelled concerns that the path to economic recovery could be hindered.

Vietnam fulfills international commitments as EVFTA takes effect
Vietnam fulfills international commitments as EVFTA takes effect
BUSINESSicon  03/08/2020 

Vietnam will continue to fulfill its international commitments so that it can take full advantage of the EU-Vietnam Free Trade Agreement (EVFTA) and recover its economy amid a resurgence of COVID-19 pandemic.

Vietjet reports loss of over VND2.1 trillion for H1
Vietjet reports loss of over VND2.1 trillion for H1
BUSINESSicon  03/08/2020 

Vietjet Aviation Joint Stock Company has reported a loss of over VND2.11 trillion (approx. US$90.5 million) in air transportation business in the first half of this year.

F&B firms prepare for possible second round of social distancing
F&B firms prepare for possible second round of social distancing
BUSINESSicon  03/08/2020 

Though local F&B businesses don't want social distancing to return in August, the experiences they had in April are helping them prepare.

Vietnam Airlines, ACV suffer heavy losses due to COVID-19
Vietnam Airlines, ACV suffer heavy losses due to COVID-19
BUSINESSicon  03/08/2020 

The COVID-19 pandemic has severely dragged down revenues of the Vietnam Airlines Corporation (Vietnam Airlines) and the Airports Corporation of Vietnam (ACV) in the second quarter of this year.

Economic growth projected to reach about 7 percent in 2021
Economic growth projected to reach about 7 percent in 2021
BUSINESSicon  03/08/2020 

Prime Minister Nguyen Xuan Phuc has issued a directive on the building of plans for socio-economic development and State budget estimate for 2021, with a target of about 7 percent of economic growth for the year.

Enterprises in industrial parks urged to use hi-tech equipment
Enterprises in industrial parks urged to use hi-tech equipment
BUSINESSicon  03/08/2020 

 Enterprises in export processing zones (EPZs) and industrial parks (IPs) should use high technologies to better manage manufacturing processes and improve product quality.

Vietnam emerges as popular industrial property destination: CBRE
Vietnam emerges as popular industrial property destination: CBRE
BUSINESSicon  03/08/2020 

Vietnam has emerged as a popular destination for industrial property projects as increased labour costs, trade disputes and COVID-19 prompt global manufacturers to vary their supply chains throughout Asia, according to CBRE.

Condotel market faces gloomy prospects
Condotel market faces gloomy prospects
BUSINESSicon  02/08/2020 

 The condotel market has faced a gloomy period due to low absorption rate while inventory has been on the rise, experts said.

Ministry of Construction eyes building low-cost housing
Ministry of Construction eyes building low-cost housing
BUSINESSicon  03/08/2020 

 The Ministry of Construction (MoC) is completing a draft resolution to encourage the development of low-cost commercial apartments to submit to the Government in the third quarter of this year.

Businesses in Hanoi’s Old Quarter shutdown amid COVID-19 fears
Businesses in Hanoi’s Old Quarter shutdown amid COVID-19 fears
BUSINESSicon  02/08/2020 

The Hanoi People's Committee has moved to require all shops throughout Hanoi’s Old Quarter to close as of midnight on August 1 due to fears regarding recent developments relating to COVID-19 epidemic.

Reality and vision for industrial zones
Reality and vision for industrial zones
BUSINESSicon  02/08/2020 

The media have recently featured industrial properties, especially industrial land, as a potential area to attract investment.

Vietnam to develop night-time economy
Vietnam to develop night-time economy
BUSINESSicon  02/08/2020 

Prime Minister Nguyen Xuan Phuc has approved a project to develop the night-time economy in Viet Nam to allow some activities to run overnight until 6am of the next day in some major tourism cities and zones.

Transport service operators begin installing yellow number plates from today
Transport service operators begin installing yellow number plates from today
BUSINESSicon  02/08/2020 

Vehicles that have registered for transport services have started installing yellow number plates with black letters and numbers from today, August 1, instead of the current white plates.

 
 
 
Leave your comment on an article

OR QUICK LOGIN