return icon

Tax duties closing in for digital services

Vietnam’s ability to charge taxes from cross-border platforms may soon improve thanks to the Organisation for Economic Co-operation and Development’s new tax rules, focusing on expanding the country’s taxing rights  under international laws.

Illustrative image. – Photo:

While tax on digital platforms is once again featured in discussions fuelled by the National Assembly last week, the Organisation for Economic Co-operation and Development (OECD) is preparing to launch a blueprint in the middle of next year.

According to information released in October, participating countries like Vietnam could be able to broaden the right to tax business profits of cross-border digital companies following the international law where users of automated digital services (ADS) are located. ADS is defined to include the provision of a digital service over the internet or other electronic network with minimal human involvement.

“The existing rules relating to physical presence will be changed in recognition of the fact that physical presence is not needed for the provision of ADS,” explained Dean Rolfe, tax partner at KPMG. “The physical presence requirement for taxation would be replaced with new rules based on the source of revenue like the internet protocol address of the end-user. This would allow Vietnam to tax revenues which are generated from sales to Vietnamese end-users.”

The advancement is expected to put the rules into operation from mid-2021, a delay against the initial timeline of the end of this year due to interruptions caused by COVID-19, according to the OECD. Meanwhile, the Ministry of Information and Communications (MIC) and the Ministry of Finance are jointly adjusting current tax regulations towards the specific responsibility of cross-border service providers.

According to Minister of Information and Communications Nguyen Manh Hung, the movement is necessary after implementation of the Law on Tax Administration, effective since July. Last November when the law was approved, it unveiled new legislation such as authorising commercial banks to automatically charge the platforms’ tax from the bank accounts of partners transferring money to them.

At a National Assembly meeting last week, Hung said that a handful of foreign over-the-top (OTT) platforms such as Netflix, Apple TV, and Buy TV have been operating without the Vietnamese government’s supervision, meaning that their tax obligation in the nation has yet to be fulfilled. Meanwhile, local OTT platforms have to obey full tax and other responsibilities.

The MIC estimates that overseas OTT sites are serving about one million subscribers in Vietnam with total revenue of nearly VND1 trillion ($43.5 million) annually. Their operations in the country have constantly improved over the years – for example, Netflix in the first quarter of this year saw a 60-per-cent increase in subscribers on-year.

Now, the General Department of Taxation (GDT) is partnering the Anti-Money Laundering Department under the State Bank of Vietnam to require Netflix to provide its earnings statistics in Vietnam over the past three years. Meanwhile, Netflix is working with the MoF and GDT to establish a representative office and servers in the country for its tax declaration.

In a response to VIR, Amy Kunrojpanya, vice chair of communications for Netflix across Asia-Pacific said, “In every country we operate, Netflix respects those rules. We have been honoured to meet regularly with the Vietnamese authorities on this topic and await further details on implementation from them.”

Other cross-border platforms such as Airbnb, Facebook, and Google are also in the crosshairs of Vietnamese tax authorities. Facebook and Google occupy nearly 70 per cent of local advertising market share, with annual revenues of hundreds of millions of US dollars. Along with Vietnam, policymakers across the world are attempting to tax them as much as possible.

The Indonesian government in October issued a new tax law outlining the duty of overseas companies without an official presence in the country. Accordingly, the companies have to pay 10 per cent VAT from July 7 when the government listed Netflix and Alphabet, the parent company of Google. The decision applies to all corporates including Facebook, Google, and Netflix.

US-based Microsoft and China’s Alibaba Cloud are the two latest names on the list of 36 companies which have been required to fulfil their tax duties, also including GitHub, UCWeb Singapore, To The New, Coda Payments, and Nexmo Inc, cited Reuters. Indonesia’s tax authority states that businesses named on the new list are subject to VAT since November 1.  VIR

Van Anh

Taxes lost from e-commerce sector during COVID-19

Taxes lost from e-commerce sector during COVID-19

The COVID-19 pandemic has become a golden opportunity for e-commerce trading floors, as well as social networks such as Facebook. However, the country has lost billions of dong in tax revenue due to e-commerce

Vietnam closes in on tech app tax avoiders

Vietnam closes in on tech app tax avoiders

Apple and Google are once again under fire over tax avoidance in Vietnam, with none of their revenues from their app markets being retained in the country. However, a new law could soon enable local authorities to take their cut.


Cafe helps with stray cat adoption in HCM City

Alex Ward and Geneva Marcelino are running cafes that work with local animal rescue shelters to help stray dogs and cats find their new homes.

Vietnam paying more attention to circuit production

Since electronic circuits are being applied in many fields from hi-tech agriculture, smart city infrastructure, to national defense, it is predicted that by 2024, the semiconductor industry in Vietnam will have exceeded the value of US$6.16 billion.

Hanoi looks to develop satellite cities

Hanoi is planning to develop satellite urban areas as part of an effort to widen local space and ease pressure from overcrowding in the inner city.

Film director Tran Van Thuy wins Grand Prize of Bui Xuan Phai Awards

Film director Tran Van Thuy won the Grand Prize of the 15th Bui Xuan Phai – For Love of Hanoi Awards during a ceremony held at the headquarters of the Vietnam News Agency (VNA) in Hanoi on October 6.

Vietnam sends 11 workers to WorldSkills Competition 2022

Eleven Vietnamese workers will participate in the WorldSkills Competition 2022 Special Edition which is being held in Europe and East Asia from September 30 to November 28, according to the Directorate of Vocational Education and Training.

VN underlines respect for territorial integrity in response to Ukraine-Russia conflict

Vietnam closely follows the developments surrounding the Ukraine-Russia conflict, spokesperson for the Ministry of Foreign Affairs Le Thi Thu Hang said during a regular press briefing in Hanoi on October 6.


HCM City to be next destination of Italian Film Festival 2022

2023 AFF Club Championship schedule, structure announced

The 2023 ASEAN Football Federation (AFF) Club Championship will start on September 27 2023, and end on May 15, 2024, the AFF Competition Committee announced at an online meeting on Monday.

HCM City’s dengue fever deaths highest in decade

HCMC recorded some 25 deaths due to dengue by October 2, the highest in a decade, according to the HCMC Center for Disease Control.

Hospitality providers in Hanoi Old Quarter revive

Hospitality providers in Hanoi’s Old Quarter have been gradually recovering from the COVID-19 pandemic. Since March 15, most of them have so far been brought back to life.

After discovery of fake VietGAP-certification, 12 units under probe

After local media reported about vegetables with counterfeited VietGAP certificates, the Ministry of Agriculture and Rural Development (MARD) asked for a review of 12 certification units and threatened to strictly punish any violators.

Another three Vietnamese digital platforms qualify for being popularized

Vietnam is expected to maintain its seventh place in the number of new app downloads globally.

Foreign travel website suggests 10 best things when visiting Vietnam

Kayaking in the waters of picturesque Cat Ba island and taking a food tour to sample delicacies around Ho Chi Minh City are among the 10 best things to do in Vietnam, according to UK-based travel website Time Out.

Vietnam’s coconut kingdom protects organic coconut areas by biological methods

When the trend of consuming organic products is increasingly popular, the development of organic material sources has become an urgent requirement. Protecting these sources has become a great concern of producers in many countries around the world.