Cross-border corporate taxation remains a challenge for VN

Though the revised tax administration law passed by the National Assembly takes into account the management of cross-border business, charging taxes on these business activities is not a simple task.

Cross-border corporate taxation remains a challenge for VN
A person browses a shopping app via a mobile phone in this file photo. Though the revised tax administration law passed by the National Assembly takes into account the management of cross-border business, charging taxes on these business activities is not a simple task

Kuek Yu Chuang, Netflix’s managing director for Asia Pacific, recently held a working session with Minister of Information and Communications Nguyen Manh Hung.

According to the Netflix representative at the session, the firm provides services in 190 countries and aims to invest in the Vietnamese market as well. Therefore, it is willing to fully comply with Vietnam’s laws and fulfill its tax obligations.

The message was delivered in the context of Vietnam’s ongoing emphasis on the legal obligations of foreign firms doing business in Vietnam, especially in terms of content control and tax payments.

At a recent workshop introducing the new law on tax administration, the tax authority revealed that Netflix had registered for taxes in Vietnam. The authority also encouraged providers of foreign services in Vietnam to register on its portal.

Speaking at the workshop, Luu Duc Huy, head of the General Department of Taxation’s Policy Department, referenced one of the new points of the law, where overseas providers of ecommerce business activities who have no permanent establishments in Vietnam must register for tax or authorize others to do so.

According to Huy, the law on tax management has 27 articles identifying the duties of banks, which include deducting and making tax payments on behalf of overseas parties conducting ecommerce activities in and earning income from Vietnam.

However, this is not an easy task, not only in Vietnam but also elsewhere, Huy said. He added that the tax authority, the central bank and commercial banks are working to determine the criteria, conditions and guidelines on payment deductions.

The revised law on tax administration was approved last June. For the law to work in practice, further guidance via decrees and circulars are needed.

As Minister Hung stressed, foreign firms doing business in Vietnam must observe the laws of Vietnam.

 

Businesses benefit from their activities in Vietnam, so they need to contribute to the country’s prosperity, Hung remarked. “Vietnam does not welcome cross-border businesses that do not comply with its laws,” he noted.

According to the minister, Vietnam will introduce legal, economic and technical measures to enforce the legal compliance of cross-border platforms.

Apart from Netflix, other television service suppliers in Vietnam are Tencent, Baidu and Apple TV.

Television subscription services in Vietnam are being regulated via Decree 06/2016/ND-CP. Businesses must fulfill requirements such as being established and registered in accordance with the law on enterprises and being licensed to supply paid television services. Foreign programs and content, before reaching users, must meet Vietnam’s requirements concerning content editing and translation management.

The decree does not have a specific regulation on cross-border television services, so the ministry is working to amend it. The draft has been presented to the Government for consideration.

Vietnam is becoming increasingly attractive to foreign television service providers. The growing presence of these services in Vietnam has prompted local suppliers to call for fairness between local and foreign suppliers in terms of the application of management policies.

According to local firms, for a copyrighted foreign movie, they are subject to various taxes, such as 10% copyright tax, 10% value-added tax and corporate income tax of over 20%. As for foreign TV programs with advertisements, the Vietnamese audience must watch those advertisements but the country collects no revenue.

Nguyen Ngoc Lanh, deputy director of VTC Digital, stated that the Government needs to create a fair legal framework for local and foreign paid television services. Similarly, Vice Chairman of the Vietnam Digital Communications Association Nguyen Xuan Cuong stressed that tax obligations must be met by all businesses in Vietnam.

A fair business environment for both kinds of businesses is what local firms have been seeking, calling for greater efforts on the part of the information ministry, the tax authority and other relevant units. SGT

Van Ly

 
 

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