E-commerce and online services deprive Vietnam of tax revenue

Vietnam is failing to effectively tax e-commerce and online services as it strives to ensure overseas-based tech giants meet their tax obligations.

“Taxing e-commerce and digital platforms is a new and difficult challenge. There is a huge tax loss in this area because the servers are placed abroad,” Finance Minister Ho Duc Phoc told the National Assembly on Wednesday.

E-commerce sellers are based both in Vietnam and other countries, and it is difficult to locate and tax them, he added. Phoc was responding to lawmakers’ concerns about tax evasion in online business.

Nguyen Thi Le Thuy, a lawmaker from the southern province of Ben Tre, estimated that around 85% of taxes from digital giants like Facebook and Google are lost every year.

Other lawmakers have said that the tax Vietnam has been able to collect recently from these tech companies is not commensurate with their income in the country.

Cross-border platforms like Facebook and Google paid VND5.1 trillion ($220 million) in taxes for the period between 2018 and 2021, according to the Ministry of Finance.

Phoc said his department has set up a payment portal and explained to e-commerce platforms and tech giants their tax rights, but taxing them remains a difficult task.

The ministry is studying the best way to tax e-commerce and the long-term goal is to establish an automatic online tax system.

Vietnam has more than 100 e-commerce platforms, including 41 that sell goods and 98 that provide services.

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