The Ministry of Finance has advised the government and submitted to the Prime Minister a proposal to amend regulations on tax management. This proposal suggests that e-commerce platforms be responsible for filing and paying taxes on behalf of organizations, individuals, and business households (sellers) operating on their platforms.

In a recent letter sent to the National Assembly's Finance and Budget Committee, the Vietnam E-commerce Association (VECOM) urged the removal of this requirement.

Speaking to VietNamNet, Tran Van Trong, General Secretary of VECOM, further explained why the association is pushing back against this policy.

- Recently, a Director from the General Department of Taxation stated that the regulation for e-commerce platforms to file taxes on behalf of individuals and business households is modeled after international practices in the EU, U.S., China, etc. Does VECOM have any counter-arguments on this matter?

Tran Van Trong: In China, the E-commerce Law (enacted on August 3, 2018) specifies that sellers on platforms are responsible for fulfilling their tax obligations and are entitled to tax incentives according to legal provisions (Article 11). Sellers must also issue paper or electronic invoices and other purchase or service documents as required by law (Article 14).

In the U.S., Amazon’s seller platform clearly states: "You are responsible for determining your own tax obligations, including calculating, collecting, remitting, and reporting all applicable taxes, regardless of whether you use Amazon’s tax calculation services." Additionally, it states: "Amazon does not report or remit any taxes on behalf of sellers to any government authority."

If the U.S. government had indeed mandated e-commerce platforms to pay taxes on behalf of sellers, Amazon would not have been able to make such a statement.

In Southeast Asia, countries and territories like Thailand, Indonesia, Singapore, Malaysia, the Philippines, and Taiwan (China) do not require third parties, such as e-commerce platforms, to file taxes on behalf of sellers. Sellers are responsible for their own tax obligations. In some countries, there are regulations that require platforms to withhold (and I emphasize "withhold") and remit VAT to tax authorities for foreign sellers providing digital services.

Vietnam has similar regulations under Circular 80/2021/TT-BTC.

- What potential concerns do you foresee if this regulation requiring e-commerce platforms to file taxes on behalf of individual and household sellers is implemented?

The obligation for e-commerce platforms to file and pay taxes on behalf of sellers is inconsistent with Article 24 of the Personal Income Tax Law, which stipulates that tax remittance by organizations paying income must be based on income withholding. This is fundamentally different from the concept of filing and paying taxes on behalf of sellers.

VECOM and its members are concerned about the feasibility and risks that e-commerce platforms will face when required to take responsibility for filing and paying taxes for sellers. This is particularly worrisome in cases where incorrect filings occur, whether due to under-reporting or over-reporting of tax liabilities. Moreover, current laws do not provide mechanisms for tax refunds for individual or household businesses.

Additionally, if there is no thoughtful solution, this regulation could lead to sellers leaving official e-commerce platforms for alternative channels that are not subject to tax obligations (such as social media platforms).

This could have negative repercussions for both tax management and the regulation of the e-commerce market.

In the current context, where goods sold on platforms may be subject to varying tax rates, and the law does not yet provide clear mechanisms for tax finalization or refunds for individual and household businesses, we believe that requiring e-commerce platforms to file and pay taxes on behalf of sellers is impractical and poses too much risk for the platforms.

While the regulation could reduce the administrative burden for tax authorities, in reality, the burden is shifted entirely onto e-commerce platforms, which lack the necessary expertise and are not tax agents.

- Have any platforms provided specific estimates of the "burden" you mentioned?

Several large platforms have estimated that the cost of compliance, if they were required to file and pay taxes on behalf of sellers, could range from tens of billions of VND to tens of millions of USD, depending on the size of the platform.

These costs would stem from operational requirements, including hiring additional tax specialists, restructuring organizational operations, upgrading or modifying information and data management systems, and handling administrative tasks such as issuing tax receipts to sellers and resolving inquiries or complaints.

VECOM is ready to act as a bridge to facilitate discussions between tax authorities and platforms, helping to study international experiences and propose feasible solutions.

Binh Minh