Vietnam launches web portal for cross-border business tax payment
The General Department of Taxation of Vietnam (GDT) has announced the launch of a web portal for foreign suppliers involved in cross-border business. Foreign cross-border companies that derive income from Vietnam can register, declare and pay taxes through the web portal without submitting physical documents to Vietnamese tax authorities.
Cross-border foreign companies are those that do not have a permanent establishment in Vietnam and conduct e-commerce and other services with companies and individuals in Vietnam.
Previously, foreign businesses had to rely on an agent or third party to file and pay taxes.
Online platform for direct tax payment
Foreign cross-border companies are required to go through an initial registration procedure on the web portal when they first access the platform. They must have a valid email address to contact the Vietnamese tax authorities directly.
Once registered, all information including the e-commerce platform, tax ID and email used will be sent to the tax authorities, after which they can pay the tax directly on the portal .
Registration steps include:
- The foreign cross-border company accesses the GDT web portal to file the tax registration file.
- The portal will send a confirmation code to the email address registered by the cross-border business.
- The cross-border company uses the confirmation code to file the tax registration file on the portal.
- The portal sends an acknowledgment of receipt of the electronic tax file to the cross-border business.
- After receiving the tax registration file, the tax administration will verify the details and information in the tax registration file
- If approved, the tax authority will send a transaction code to access and pay the tax on the portal. If this is not the case, the tax administration will notify any additional documents to be submitted for correction and resubmission.
There are no fees or charges for using the web portal.
Foreign cross-border companies are required to file a quarterly tax declaration. The first direct registration can be made using Form 01/NCCNN, while subsequent quarterly reporting can be made using Form No. 02/NCCNN in accordance with Circular 80.
Cross-border suppliers are required to pay VAT and corporate tax calculated as a percentage of business income generated from Vietnam. Companies can, however, carry out tax exemption or reduction procedures under the applicable double taxation agreement (DTAA).
Companies that encounter difficulties can contact the support offered directly on the web portal.
Cross-border platforms will be strictly checked for tax compliance
The GDT was also 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 of the tax administration law. Circular 80 came into force on January 1, 2022 and provides guidance on tax administration for e-commerce business activities based on digital platforms.
According to the circular, companies that do not register with the Vietnamese tax authorities will be subject to withholding taxes. Business organizations or companies transacting with foreign cross-border platforms are required to withhold tax and file it with the tax authorities. For individuals transacting with foreign cross-border platforms, the bank or payment provider will be asked to withhold the tax payment. If this is not possible, the bank or payment provider must monitor the amount paid by 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 tax collection.
Tax authorities recognize that it is difficult to tax e-commerce activities, as several companies do not have physical offices in Vietnam. Additionally, individuals and businesses that use social media to sell services or products do not issue invoices or pay taxes. Tracking payments becomes more difficult when non-physical products, such as software or music, are sold.
Thang Vu, Associate Director, Taxation at Dezan Shira & Associates’ office in Ho Chi Minh City, notes that the new portal will allow foreign cross-border platforms to pay tax directly rather than using a third party. In addition, Vietnam aims to address the deficit in tax collection, especially from foreign companies, on Vietnamese-sourced income.
Vietnamese tax authorities said there were 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. Vietnamese authorities have called for strict tax compliance and taxed tech giants like Google and Facebook, claiming they account for 70% of online advertising. income but do not pay enough taxes
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