The Ministry of Finance has proposed a regulation that requires Facebook and Google to conduct cross-border payment transactions through the National Payment Corporation (Napas), Tuoi Tre newspaper reports.

The ministry has asked for a coordination of the State Bank of Vietnam to implement the plan which is aimed at supporting tax agencies to collect tax from cross-border transactions.

The ministry also wants foreign companies providing Internet and telecommunications services in Vietnam to open representative offices in the country, and file for tax payment. The ministry explained that most global technology companies do not register their business or have official representative offices in Vietnam while their transactions are cross-border, making it hard to collect tax.

At present, Google and Facebook provide online advertising services in Vietnam in two ways. In the first one, services are offered through agencies in Vietnam which have to fulfill their tax obligations in accordance with Vietnamese law.

Or transactions are conducted online and Vietnamese buyers will make payments via international credit cards or e-wallets. It is difficult to clarify the real value of transactions done this way as there are no invoices or buyers may use invoices of other services to deceive tax authorities.

In addition, tax agencies may find it hard to determine advertising revenues based on click counts of foreign network companies as this requires checks of payment transactions at banks of both buyers and service providers but banks that serve foreign technology companies are mostly abroad.

Therefore, the ministry proposed the central bank look into its proposal, and relevant agencies review, amend and supplement regulations to prevent e-commerce firms from tax evasion.

SGT