E-commerce platforms must pay taxes on behalf of sellers from 2025

With nearly 93% of delegates in favor, on the afternoon of November 29, the National Assembly voted to pass a law amending 9 laws related to the financial sector, including: Securities Law, Accounting Law, Independent Audit Law, State Budget Law, Law on Management and Use of Public Assets, Tax Management Law, Personal Income Tax Law, National Reserve Law, and Law on Handling of Administrative Violations.

According to amendments to a number of articles of the Law on Tax Administration, e-commerce platforms, digital platforms (domestic and foreign) and other organizations with digital economic activities must deduct, pay taxes on behalf of, and declare the deducted tax amount for sellers on these platforms.

In case the seller is not eligible for deduction or payment of tax on behalf of the seller, they must directly register, declare and pay tax. The dossier, procedures, methods and responsibilities for declaration and payment of tax on behalf of e-commerce platforms and digital platforms will be specified in detail by the Government.

In addition, providers of e-commerce and digital platform activities (Facebook, Apple, Tiktok, Google...) must directly or authorize others to register, declare and pay taxes in Vietnam.

Reporting on the acceptance and revision of the draft law before the National Assembly votes to approve it, Mr. Le Quang Manh, Chairman of the Finance and Budget Committee, said that some opinions said that removing the phrase "no permanent establishment in Vietnam" for foreign suppliers doing e-commerce and digital platforms is not appropriate.

However, the Ministry of Finance - the law drafting agency - affirmed that removing this phrase is in line with international trends and ensures fair management. This creates a basis and legal corridor for tax authorities to urge foreign suppliers to register, declare and pay taxes via the Electronic Information Portal for Foreign Suppliers and prevent tax losses on e-commerce platforms and digital platforms.

This is a new point compared to the present, when sellers on e-commerce platforms such as Shopee, Lazada, Tiktok Shop... have to declare, pay taxes and take responsibility themselves. Online platforms are only obliged to provide information to tax authorities.

Currently, about 102 foreign suppliers such as Meta (Facebook), Google, Tiktok, Netflix, Google... have declared and paid taxes through the industry's electronic information portal. Accumulated from March 2022 - the time the information portal for foreign suppliers was put into operation, foreign enterprises have paid over 18,600 billion VND. In addition, the amount of tax deducted and paid by Vietnam on behalf of suppliers since the portal was put into operation is about 4,050 billion VND.

With domestic e-commerce platforms, the tax industry has started collecting from this year. Of which, Hanoi alone has collected about 35,000 billion VND as of early November.

The newly passed law also adds provisions on administrative sanctions for independent auditors. Accordingly, organizations and individuals who commit violations will be subject to administrative sanctions, criminal prosecution or State management measures, depending on the nature and severity of the violations. In case of causing damage, compensation must be paid according to regulations.

The maximum fine for violations by independent auditors is 2 billion VND for organizations and 1 billion VND for individuals. The statute of limitations for administrative sanctions is 5 years. The Government shall specify the details of this sanction.

In the previous discussion, Chairman of the Finance and Budget Committee Le Quang Manh said that there were opinions suggesting clarifying the level of administrative penalties to ensure deterrence. There were also opinions suggesting only increasing the maximum penalty level by 2 times the current level and the statute of limitations for penalties to 2 years, due to the lack of audit personnel compared to the market size.

The Standing Committee of the National Assembly considers this to be the maximum fine, applicable only to some serious violations of auditing standards, not to the extent of criminal prosecution. The Standing Committee of the National Assembly requests the Government to review, assess the impact and impose penalties for each act, when drafting a guiding decree.