return icon

Facebook and YouTube facing extra regulations for Vietnam

Major social network sites such as Facebook and YouTube face even stricter controls in Vietnam if a draft decree amendment on internet management gets approval, 

adding to the pressures for the popular sites to wipe out fake news and adhere to tax obligations.

According to Article 23 of the draft amendments to Decree No.72/2013/ND-CP stipulating the management, provision, and use of internet services and online information, social networks with more than one million users per month will have to get licensed through the Ministry of Information and Communications (MIC) to operate social networks in the country.

As of current time, Facebook and YouTube get about 2.6 billion and 1.9 billion users per month globally, respectively. Thus, both platforms have to be licensed through the MIC to keep their performance in Vietnam.

Under the draft, the MIC will attach measuring tools to such networks to regularly supervise the user base and the number of interactions on the platforms. Moreover, the ministry will check and issue documents to require companies to file dossiers to get licences for their social networks. Notably, the draft decree also regulates that licensed social networks would be allowed to charge usage fees and include live-streaming services.

The changes could be seen as part of a crackdown with the social media sites coming under increasing pressure in Vietnam and beyond to eradicate false news and harmful videos. Measures will also apply to tax obligations that the tech firms have ignored in Vietnam for a long time. The big US digital companies have enjoyed growing sales as people stay at home during the COVID-19 outbreak. Nevertheless, they have commonly been criticised for paying a tiny amount of tax on the large revenues which they generate in overseas countries.

In a recent move, India imposed a digital tax on global tech giants invoicing their revenues out of India. Meanwhile, Indonesia also decided to tax the social media groups to fund government spending on coronavirus relief.

In Vietnam, slapping tax charges on these digital heavyweights has been one potential option for local authorities as the groups have yet to open representative offices and branches here. Recent research by the Vietnam Institute for Economic and Policy Research (VEPR) confirmed that Facebook and Google (operator of YouTube) are two US internet giants with massive advertising businesses in Vietnam but are yet to fulfil their local tax obligations.

The research cited data from market research company ANTS saying that Facebook and Google alone account for 66 per cent of digital advertising market share in Vietnam. However, the companies implement business without an advertising partner in Vietnam and collect money on their accounts. Thus, it is hard to control advertising revenue generated in Vietnam and transferred overseas. This not only causes a loss of tax revenue for the state but also eats up the market share of local digital content companies.

According to ANTS, the total revenue of the local advertising market last year hit about $648 million, including Facebook’s $275 million, Google’s $174.9 million, and $180.9 million separating the other local companies. In 2020, the earnings in the whole market is forecast to hit $760 million, including $512 million from the two titans.

To prevent the loss of tax, the National Assembly in June 2019 adopted the amendments to the Law on Tax Administration, effective from July 1, outlining that all cross-border businesses that have been earning money from Vietnam have to perform tax registration, declaration, and payment. That means overseas cross-border service suppliers will have to directly authorise a third party to carry out the tax obligation even if they have no representative offices in the country.

To materialise the new regulation, the General Department of Taxation has been publishing tax registrations of companies on its website. Once they do not take the obligation, local authorities will automatically charge tax at the source.

The Law on Tax Administration has already stipulated a regulation to allow banks to deduct from the companies’ accounts. Specifically, Clause 27 outlines that banks have to take the obligation of deduction and perform the tax obligation of the cross-border services suppliers, whose incomes are incurred from Vietnam. Currently, tax authorities have been working with the State Bank of Vietnam and other commercial banks to clarify standards, conditions, and develop guidelines for deducting activities per the regulations.

Vu Tu Thanh, deputy regional managing director at the US-ASEAN Business Council in Vietnam, said there is no sure-fire way to gauge exact revenue generated by Facebook and Google here. “The government is making efforts to reform digital payments so that transactions on these platforms are conducted via these payment gateways,” Thanh said. “In the long term, it is crucial for Vietnam to work with other countries to address this challenge.” VIR

Song Van

Facebook's $5.7bn bet on India's richest man Mukesh Ambani

Facebook's $5.7bn bet on India's richest man Mukesh Ambani

The social media giant becomes a shareholder in cut-price Indian mobile internet company Reliance Jio.

PewDiePie signs exclusive live-streaming deal with YouTube

PewDiePie signs exclusive live-streaming deal with YouTube

YouTube's biggest star will stream on the platform again, after defecting to a rival in 2019.


Vietnamese network operators now manufacturing cameras

Most cameras provided in the local market are foreign made.

Vietnam’s most modern library

Located at National Economics University, the most modern library in Vietnam covers around 10,000 square metres and is funded by the World Bank through the Support for Autonomous Higher Education Project.

China purchases more Vietnamese fruit for lunar new year holiday

Chinese demand for fruit for the lunar new year holiday accounts for up to 50 percent of Vietnam’s total fruit exports. Experts warn that the products may get stuck at border gates.

Press agencies need to become technological institutions: minister

Twenty years ago, editors-in-chief took pride in the fact that while printing machines were working, distributors were sitting eating bread and waiting for the first newspapers to be put out to deliver.


Vietnamese innovative startups should strive to become regional, international “unicorns”: PM

Seven more prosecuted in bribery case at foreign ministry

The investigation agency under the Ministry of Public Security has issued decisions to prosecute, arrest and search the residences and workplaces of seven more individuals for their involvement in a bribery case at the Ministry of Foreign Affairs.


President arrives in Seoul, beginning state visit to RoK

IFC plans to pour 320 million USD into three Vietnamese banks

The International Finance Corporation (IFC), a member of the World Bank Group, has proposed a total investment of 320 million USD in three Vietnamese banks, reported the Nikkei Asia.

Girl with brittle bone disease opens class for poor students

As she wasn't able to fulfil her dream of becoming a teacher due to congenital vitreous disease, Nguyen Thi Ngoc Tam opened a free class for poor students.

Miniature-human sculptures popular with customers

The price of a sculpture ranges from one to five million VND, depending on the difficulty of the model. Eight to 19 ordered products are made per day to guarantee progress as well as the quality of the sculpture for the customer.

Lacquer village outlasts centuries-old craft

Alongside a wide range of products made from natural materials such as wood, bamboo and rattan, the village also has created new gold- and silver-inlaid products made from ceramic, pottery, and composite.

Local firms do business in P2P lending market

P2P Lending has become a hot issue in Vietnam, especially with the participation of Chinese businesses.

Vietnam to hold first cat fish festival soon

Vietnam’s first cat fish festival is scheduled to take place in the southern province of Dong Thap on December 16-17.

Control of bad content on social networks should be tightened

Tik Toker No O No, who criticized the poor, was boycotted by the community and forced to shut down by the authorities. He is not the first Tik Toker that has posted bad content on social networks.

Businesses struggle to keep workers as exports slow

Businesses have been struggling to maintain and support their workers as the Lunar New Year approaches.