Ho Chi Minh City seeks to tax sales on Facebook

By VnExpress   February 20, 2017 | 11:40 pm PT
Small and home-based online business owners may soon see smaller profits as authorities step up efforts to increase tax revenues.

The Ho Chi Minh City government should work with Facebook on how to collect tax from businesses running on the social media site, officials said.

The city currently hosts a dynamic e-commerce scene with more than 80,000 websites, half of which have stable business, but tax collection from the segment is low, said Pham Thanh Kien, head of the city’s trade department.

"In particular tax collection has not been done from sales via Facebook," Kien said at a meeting with the city's tax authority. "(We) propose the People's Committee work with Facebook on a mechanism to control tax collection." 

Ho Chi Minh City, where the most active e-commerce in Vietnam takes place, should find out measures to prevent losses in tax revenues, Deputy Finance Minister Vu Thi Mai told tax officials at the meeting on Sunday.

Just a quarter of Vietnam's non-state businesses have declared value-added tax, Mai was quoted by the Tuoi Tre (Youth) newspaper as saying at the meeting.

A majority of online businesses using social networking sites such as Facebook do not issue invoices, which has prevented the authority from collecting tax.

Vietnam's e-commerce market, which has one of the world's fastest growth rates, jumped 37 percent in 2015 to around $4 billion, based on government statistics. 

The growth rate is about 2.5 times faster than that in Japan, according to Tran Duc Tam, an industry expert.

The government has projected revenue by Vietnam's online retail to hit $10 billion by 2020, accounting for 5 percent of the country’s retail market. Last year retail sales rose 10.2 percent from 2015 to $118 billion, based on government data.

The online tax tightening plan has received mixed responses.

“Facebook is just a channel to advertise products and communicate with customers. With no electronic invoicing, how to tax them?” Luong Nguyen Hoang, a VnExpress reader said in a comment.

Others raised concerns that many online retailers use anonymous accounts for transactions, while some others could be one-time or small-time sellers with insignificant revenues, making it hard for tax authorities to regulate activities.

Online marketplaces such as Facebook have made it easy for small businesses and start-ups to set up business due mainly to the convenience they provide and the opportunity to connect with customers, Tuan Anh Pham wrote in another comment. He suggested market regulators take a cautious approach when it comes to requiring online retailers to pay taxes.

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