E-commerce platforms unwilling to pay taxes on sellers’ behalf

Experts said e-commerce platforms are afraid that making tax statements and paying taxes on behalf of business individuals will create excessive costs and personnel burdens.

On average, 3.5 million transactions are made on e-commerce platforms each day in Vietnam, and the transaction value has been increasing steadily.

Many sellers on e-commerce platforms have been dodging taxes, e-commerce platforms will have to pay taxes on the sellers’ behalf, under a new regulation taking effect August 1. Individual sellers that have an annual income of at least VND100 million ($4,348) should pay VAT and personal income tax, and e-commerce platforms should do so on the sellers’ behalf.

The Vietnam E-commerce Association (VECOM) has recently said that the regulation is not feasible and would heavily affect e-commerce platforms as well as hundreds of thousands of business individuals.

According to VECOM, e-commerce platforms are not subject to make income tax declarations and deductions for sellers in line with the Law on Personal Income Tax. They just provide technology infrastructure to connect buyers and sellers.

The representatives of some e-commerce platforms including Chotot and Batdongsan said they cannot control and have no information about sellers’ revenues, bank accounts, identity cards, tax codes and addresses. They said such a regulation is unprecedented in the Southeast Asian region, including Vietnam.

Ta Thi Phuong Lan, deputy head of the Tax Administration Department on Small and Medium Enterprises, Business Households and Individuals under the ministry’s General Department of Taxation, said there can be a roadmap for e-commerce platforms to comply with the regulations instead of starting right from August 1. It can be first applied to platforms which are capable of managing sellers’ revenues, she noted.

Tax authorities will work with e-commerce platforms and relevant watchdogs such as the Ministry of Industry and Trade and the Ministry of Information and Communications to create a most suitable roadmap, she told VnExpress.

According to a report by the Department of E-commerce and Digital Economy under the Ministry of Industry and Trade, in 2020, some 53 percent of the Vietnamese population joined the online retail market, boosting the growth of the local e-commerce sector by 18 percent on-year to $11.8 billion, representing 5.5 percent of the total retail sales. The Covid-19 pandemic has prompted many enterprises to do business online while luring many first-time online shoppers.