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Vietnam Launches Web Portal for Tax Payment of Cross Border Activities

Vietnam’s General Department of Taxation (GDT) announced the launch of a web portal for overseas suppliers involved in cross-border activities. Foreign cross-border businesses that derive income from Vietnam can register, declare and pay tax through the web portal without submitting physical documents to the Vietnamese tax authorities.

Cross-border foreign businesses are those without permanent establishments in Vietnam and carry out e-commerce and other services with businesses and individuals in Vietnam.

Earlier, foreign businesses had to rely on an agent or third party to declare and pay taxes.

Online platform for direct tax payment

Foreign cross-border businesses are required to go through an initial registration procedure on the web portal the first time they access the platform. They need to have a valid email address to engage directly with Vietnam’s tax authorities.

Once registered, all the information including about the e-commerce platform, tax identification number, and email used will be sent to the tax authorities, after which they would be able to pay tax directly on the portal.

Steps for registration include:

  1. The foreign cross-border business accesses the web portal of the GDT to file the tax registration dossier.
  2. The portal will send a confirmation code to the email address registered by the cross-border business.
  3. The cross-border business uses the confirmation code to submit the tax registration dossier on the portal.
  4. The portal sends a receipt notice of the electronic tax dossier to the cross-border business.
  5. After receiving the tax registration dossier, the tax authority will check details and information in the tax registration dossier
  6. If approved, the tax authority will send a transaction code to access and pay tax on the portal. If not, then the tax authority will notify of any additional documents to be submitted for correction and resubmission.

There are no fees or charges for using the web portal.

Foreign cross-border businesses are required to make quarterly tax declaration. The first direct registration can be done using Form 01/NCCNN while subsequent quarterly declarations can be made using Form No. 02/NCCNN as per Circular 80.

Cross-border providers are required to pay VAT and CIT calculated as a percentage of the business revenue generated from Vietnam. Businesses however can carry out tax exemption or reduction procedures under the relevant double tax avoidance agreement (DTAA).

Businesses that face difficulties can contact the support provided directly on the web portal.

Cross border platforms to be strictly scrutinized for tax compliance

The GDT has also been ordered to compile a list of all cross-border platforms in Vietnam with their websites and registered addresses.

The development comes after Vietnam issued Circular 80 guiding the implementation on the Law on Tax Administration. Circular 80 came into effect on January 1, 2022, and provides guidance on tax administration for e-commerce business activities based on digital platforms.

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As per the Circular, businesses that do not register with the Vietnamese tax authorities will be subject to withholding payments. Business organizations or companies conducting transactions with foreign cross-border platforms are required to withhold tax and deposit to the tax authorities. For individuals that conduct transactions with foreign cross-border platforms – the bank or payment provider will be asked to withhold tax payment. If this is not possible then the bank or payment provider must monitor the amount paid by the individuals and report it to the tax authorities on the 10th of each month.

The GDT will also maintain a list of foreign cross-border businesses that will be shared with banks and payment providers for the collection of taxes.

The tax authorities acknowledge that it is challenging to tax e-commerce activities as several businesses do not maintain physical offices in Vietnam. In addition, individuals and businesses using social media to sell services or products do not issue invoices and do not pay taxes. Tracking payments becomes more challenging when products that are not physical such as software or music are sold.

Thang Vu, Associate Manager, Tax at Dezan Shira & Associates’ Ho Chi Minh City office notes that the new portal will help make it convenient for foreign cross-border platforms to pay tax directly rather than use a third party. In addition, Vietnam aims to rectify the shortfall of tax collection, particularly from foreign businesses, on Vietnam-sourced income. 

Vietnam’s tax authorities stated that they are at least 64 foreign service providers in Vietnam. Cross-border platforms like Google and Facebook were taxed US$218.5 million (VND 5 trillion) between 2019 and 2021. Vietnam’s authorities have been calling for strict tax compliance and taxing tech giants like Google and Facebook saying that they account for 70 percent of online ad revenues but don’t pay adequate taxes