Tax penalties worry online sellers as authorities crack down on evasion

Since 2022 Ngoc Mai, an online seller in Hanoi, has had revenues of VND800 million ($31,400) but never reported them to tax authorities.

She recently received a notice for dues of VND45 million in taxes and fines, with the latter accounting for two-thirds of the amount.

The General Department of Taxation estimates that 3.1 million individuals and households do business, but many have yet to register their business or pay taxes.

Hanoi tax authorities collected taxes and fines from 41 online sellers in the first quarter of this year.

They are also monitoring 6,510 individuals and small businesses for tax purposes.

Lawyer Nguyen Dinh Hiep said anyone selling goods and services online needs to register their business with authorities within 10 days.

Delays could result in a fine of VND15 million, he warned.

Online vendors typically need to pay 1% value-added tax and 0.5% personal income tax, and any delay in payment could entail a penalty of 0.03% a day, he said.

Some people are concerned about large fines for their delay in paying tax on a minor sale they made years ago.

Nam Anh in Hanoi sold some of her children’s clothes online in 2019 for VND600,000 and now faces a fine of VND4 million.

Thanh Thanh began selling on e-commerce platform Shopee in 2020 but never registered her business.

She has had sales of VND100 million.

"I want to register now, but I am concerned that the fines will be almost as much as my profit."

But lawyer Hiep said a vendor with sales of less than VND100 million a year does not need to pay income tax.

Last year VND97 trillion tax was collected on e-commerce, up 14% year-on-year.

Prime Minister Pham Minh Chinh has recently ordered the Ministry of Finance to make electronic bills mandatory for e-commerce sellers to tighten oversight.