Key takeaways

• Responsibilities for withholding and paying taxes on behalf of households and individuals conducting business activities on e-commerce platforms and digital platforms with payment functions
• Imposition of different tax rates on resident individuals and nonresident individuals
• Method of declaring and paying withheld tax amounts
• Dossiers and procedures for tax declaration, tax payment and tax refund

In more detail

1. Subjects of tax withholding obligations for business households and individuals

• Organizations that are operators of e-commerce trading platforms and digital platforms with payment functions with which buyers can make direct payments on the platforms through electronic wallets, bank cards or integrated transfer systems, and cash payments upon receipt of goods ("cash on delivery") are subject to withholding obligations.
• Organizations engaged in digital economic activities are also subject to withholding obligations. These are organizations that cooperate in business activities of goods trading and service provision with households and individuals engaged in business activities, or support business households and individuals in conducting transactions for the provision of goods and services through the digital environment, including: intermediary service connection platforms; digital content provision platforms; online advertising organizations; storage and cloud computing service providers; social network platforms with business activities; online learning service providers; online gaming platforms and digital entertainment services; organizations in Vietnam that are partners of foreign digital platform providers, making payments for income from digital content products and services to individuals under agreements with foreign digital platform providers, and intermediary payment service providers.

Hereinafter referred to as "in-scope platforms."

2. Households and individuals subject to tax withholding by in-scope platforms:¹

• Resident households, resident individuals and nonresident individuals that engage in business activities on in-scope platforms are subject to tax withholding.
• Households and individuals selling goods and services on out-of-scope platforms will need to register, declare and pay taxes in Vietnam.

3. Scope of withholding

• For resident households and individuals, in-scope platforms will need to withhold value-added tax (VAT) on revenues derived in Vietnam and withhold personal income tax (PIT) on revenues derived inside and outside of Vietnam.
• For nonresident individuals, in-scope platforms will need to withhold VAT and PIT on revenues derived in Vietnam.

4. Timing for tax withholding, filing and payment

• In-scope platforms are required to withhold taxes before remitting payments collected from buyers to business households and individuals.
• Withheld taxes are declared and paid by in-scope platforms monthly.

5. Applicable withholding tax rates²

• The withheld VAT and PIT are calculated by applying the applicable tax rate to revenues from each completed transaction, which is an amount collected by in-scope e-commerce/digital platforms from buyers on behalf of households and individuals.
• If in-scope platforms cannot determine whether a transaction is a sale of goods or a provision of services, they are allowed to apply the highest VAT and PIT rates.

6. Some notable obligations of in-scope e-commerce/digital platforms³

• Local platforms register a 10-digit tax code separately used for tax withholding obligation as provided under this Draft Decree.
• Foreign platforms register a 10-digit tax code under Circular No. 80/2021/TT-BTC and use it for tax withholding obligation as provided under this Draft Decree.
• In-scope e-commerce/digital platforms are obliged to provide information on business households and individuals to the tax authorities upon their request.
• They must register to use the electronic tax withholding certificates (chứng từ khấu trừ thuế điện tử in Vietnamese).
• In-scope e-commerce/digital platforms must issue electronic certificates of e-commerce tax withholding for business households and individuals annually and transmit the data to the tax authorities.

7. Tax refund

After in-scope platforms have fulfilled the declaration and payment of the withheld taxes incurred by business households and individuals in a relevant tax year, these households and individuals can apply for a tax refund if their total annual revenue does not reach the VAT and PIT threshold trigger, or is exempt from PIT.

1 Article 2.1 of the Draft Decree.
2 Article 4 of the Draft Decree.
3 Articles 5.1 and 6 of the Draft Decree.