Vietnam's General Department of Taxation (GDT) is reportedly finalizing a draft circular that provides implementing rules for the taxation of e-commerce.

General measures for the taxation of e-commerce were introduced as part of the Law on Tax Administration that was approved in June 2019 and entered into force on 1 July 2020. The measures include that payments for supplies of goods and services via e-commerce will be subject to withholding when made to non-resident suppliers by Vietnam individuals or other persons that are not registered for tax purposes. Further, non-resident e-commerce suppliers are required to register, declare, and pay tax in Vietnam or appoint an agent to do so. This was followed by Decree No. 126/2020/ND-CP, which entered into force on 5 December 2020 and provides rules for commercial banks and intermediary payment service providers to withholding and pay tax on payments to overseas e-commerce suppliers that have not registered for tax in Vietnam.

Under the draft circular being finalized, greater detail is provided for the implementation of the e-commerce taxation requirements, including relevant definitions and rules on the tax compliance requirements and related matters. Key definitions include the following:

• "E-commerce activities" means the conduct of part or the entire process of commercial activities by electronic means via the internet, mobile telecommunications networks, or other open networks; and
• "Digital-based business" means the provision of services via the internet or an electronic network where the nature of the provision is basically automated with little to no human intervention and cannot be done without using information technology.

With respect to tax compliance, the draft circular provides that the following are responsible for tax registration, declaration, and payment for e-commerce activities and digital-based business:

• Non-resident suppliers that do not have a fixed place of business in Vietnam and conduct e-commerce or digital-based business with organizations and individuals in Vietnam;
• Organizations in Vietnam that purchase goods and services from non-resident suppliers;
• Tax organizations and agents operating in Vietnam that are authorized by non-resident suppliers for meeting the tax obligations; and
• Commercial banks and intermediary payment service providers.

To comply with the obligations, the draft circular provides the following:

• Tax registration, declaration, and payment will be handled through an e-portal established by the GDT;
• Registration will not be required until the e-portal is activated and if this occurs after the draft circular is effective, tax will still be incurred from the effective date, but interest will not be charged for late declaration/payment;
• Tax will be charged in accordance with Circular No. 103/2014/TT-BTC regarding Foreign Contractors Withholding Tax, which includes both a corporate income tax (CIT) component and a value added tax (VAT) component;
• Registered non-resident suppliers will pay tax directly on a quarterly basis, while banks and intermediary payment service providers will deduct and remit tax on a monthly basis; and
• Taxable revenue will be the amount received by the non-resident supplier from its supplies in Vietnam, determined based on payment information (credit card or bank account information), residency information (billing, delivery, or home address), and access information (mobile phone country code, IP address, and landline address).

In relation to the requirements, the names of registered non-resident suppliers will be published on the GDT website. Further, the GDT will work with agencies concerned in order to identify non-resident suppliers that have not registered and inform commercial banks and intermediary payment service providers accordingly to deduct and remit the tax due.