E-commerce platforms may have to pay taxes on behalf of sellers from 2025

On the morning of November 19, the National Assembly Standing Committee held its 39th session to give opinions on a law amending laws related to financial issues, including the Law on Tax Administration.

According to current regulations, sellers on e-commerce platforms must declare, pay taxes and take responsibility. E-commerce platforms are only obliged to provide information to tax authorities.

However, in the draft amendment and supplement to a number of articles of the Law on Tax Administration, the Government proposed that from January 1, 2025, e-commerce platforms and digital platforms must deduct, pay taxes on behalf of, and declare the deducted amount for sellers (households and individuals doing business) on the platform.

The Government will detail the documents, procedures, methods and responsibilities for declaring and paying taxes on behalf of e-commerce platforms and digital platforms.

Providers of e-commerce and digital platform activities must also register, declare and pay taxes in Vietnam. In particular, foreign providers that generate income such as Facebook, Apple, Netflix... must directly or authorize them to register and declare and pay taxes.

Mr. Le Quang Manh, Chairman of the National Assembly's Finance and Budget Committee, said that the process of explaining, receiving, and revising the draft law, some of the amendments and supplements to the Law on Tax Administration are related to the provisions of the Law on Personal Income Tax. Therefore, the reviewing and drafting agency agreed to submit to the National Assembly Standing Committee, reporting to the National Assembly to supplement the amendments to some articles of the Law on Personal Income Tax.

Specifically, supplementing Article 33 of the Law on Personal Income Tax requires that managers of e-commerce floors and digital platforms must deduct, pay taxes on behalf of, and declare deducted taxes for transactions of sellers on these platforms.

In a report explaining a law amending 7 laws related to finance sent to the National Assembly, the Ministry of Finance - the drafting agency - affirmed that technically, the floors can completely declare and pay taxes on behalf of sellers.

The agency also said that the regulation requires e-commerce platforms to deduct, declare, and pay taxes on behalf of sellers to prevent tax losses and reduce costs and administrative procedures. Because only one contact - the e-commerce platform, digital platform - needs to pay and declare tax obligations on behalf of hundreds of thousands of individuals and business households on the platform.

According to the Ministry of Finance, this regulation may cause e-commerce platforms to incur additional costs in upgrading their systems to determine the amount of tax deducted and paid on behalf of sellers, but "this level is insignificant compared to the cost of hiring additional tax and customer care staff".

In addition, to ensure fairness, regulations on e-commerce platforms deducting, declaring and paying taxes on behalf of sellers will apply to both domestic and foreign platforms.

On November 5, Deputy Prime Minister Ho Duc Phoc said that the tax sector has applied many measures to prevent tax losses in e-commerce. Tax authorities will use artificial intelligence (AI) tools to control revenue and sales on e-commerce platforms.

Currently, about 102 foreign suppliers such as Meta (Facebook), Google, Tiktok, Netflix, Google... have declared and paid taxes through the industry's electronic portal.

Accumulated from March 2022 - the time the portal for foreign suppliers was put into operation, foreign enterprises have paid over VND 18,600 billion. In addition, the amount of tax deducted and paid by Vietnam on behalf of suppliers since the portal was put into operation is about VND 4,050 billion.

Regarding domestic e-commerce platforms, Mr. Phuc said that the tax sector has started collecting from this year. Of which, Hanoi alone has collected about 35,000 billion VND as of early November.

The draft law amending and supplementing laws related to financial issues will be voted on and approved by the National Assembly on November 29.