On the morning of November 22, the National Assembly reviewed the proposed amendments to the Corporate Income Tax Law. Deputy Prime Minister Le Thanh Long outlined the new provisions, which include:

Foreign enterprises conducting e-commerce or digital platform business activities in Vietnam must pay taxes on income generated within the country.

The definition of a permanent establishment for foreign businesses now includes e-commerce and digital platforms used to provide goods and services in Vietnam.

Le Quang Manh, Chairman of the National Assembly's Finance and Budget Committee, emphasized the need for clarity on the practical ability to collect corporate income tax from foreign companies that lack a physical presence in Vietnam but conduct transactions via e-commerce platforms.

The committee also raised concerns about Vietnam’s scope of taxation rights in cases where foreign businesses establish virtual permanent establishments. These concerns stem from discrepancies with existing international tax treaties Vietnam has signed.

International practices generally limit taxation on foreign service providers, treating e-commerce goods transactions as traditional import-export activities, subject only to indirect taxes rather than corporate income taxes.

The Finance and Budget Committee noted potential gaps in the current proposal regarding income generated in Vietnam. Specifically, the regulation may not comprehensively address all taxable income under Vietnam's jurisdiction.

The inclusion of virtual permanent establishments for foreign digital businesses has received broad support, as it would expand Vietnam’s taxation rights. However, concerns persist over feasibility, particularly regarding:

Conflicts with international treaties that lack provisions for taxing virtual establishments.

Foreign businesses operating from countries with double taxation agreements may easily restructure to benefit from tax advantages elsewhere.

The Finance and Budget Committee suggested refining the draft to clarify tax management for e-commerce platforms and digital businesses while proposing practical solutions to address gaps in enforcement.

Tran Thuong