Saigon's tax man zeroes in on celebrities pushing products on Facebook

Celebrities who advertise products on Facebook should be taxed accordingly, members of HCMC's legislative People’s Council said at a meeting on Wednesday.

“Vietnamese actors, actresses and models are working as brand ambassadors for different companies and using Facebook to advertise products by either writing posts or streaming live,” councilor To Thi Bich Chau told a meeting attended by the head of the city's tax department, Tran Ngoc Tam.

“What they earn from promoting products on this channel is not inconsiderable, and tax collectors should do something to make it fair for everybody and avoid a situation where high income earners pay less tax than they are supposed to,” she said.

Councilor Cao Anh Minh also asked what authorities have done to collect taxes from people running e-commerce businesses in the city.

Tam responded by saying the city’s tax office is now able to control local e-commerce services, but is still trying to keep up with the services provided by foreign companies, such as Facebook.

Vietnam now boasts more than 52 million active Facebook accounts to advertisers, Reuters has reported, citing social media agencies We Are Social and Hootsuite.

According to official data, 13,500 Facebook users in the city are running e-commerce business.

The city has been trying to tax sales on Facebook since early this year, and the law requires those with an annual revenue of VND100 million ($4,400) to declare tax.

District tax departments in the city have sent out tax demands to Facebook retailers to register their businesses and declare tax, but not many retailers have been willing to comply.

Nguyen Thi Cuc, chairwoman of the Vietnam Tax Consultant Association, said Vietnam’s tax policy for online businesses is incomplete and therefore not compulsory. This poses a challenge for tax authorities when most transactions are still conducted in cash.

In a similar move, the Hanoi Department of Taxation has sent text messages to 13,422 Facebook accounts that use the social media network as a retail platform, but few have responded.

Online sales in Vietnam have expanded rapidly in recent years, currently accounting for 3.39 percent of the country’s retail market. The total retail market grew 10.2 percent last year to $118 billion, mainly fuelled by a growing middle-class with expanding disposable incomes and an increasing number of internet users.

The World Bank forecasts that Vietnam’s $200 billion economy is likely to grow to a trillion dollars by 2035. More than half of its population, compared with only 11 percent today, is expected to join the ranks of the global middle class with consumption of $15 a day or more by that time.

According to one estimate, about 30 percent of the population will be buying goods and services over the internet in 2020, with each shopper spending an average of $350 per year.