Vietnam tries to get a grip on Facebook, Google operations

The complicated issue of taxing foreign companies like Facebook and Google was raised by Vietnamese authorities during a meeting on Wednesday.

Over the last two years, Vietnamese businesses have been taxed a total of VND120 billion ($5.2 million) on Facebook and Google services, according to data from the Ministry of Finance cited at the meeting.

Due to the fact neither company has representative offices in Vietnam, tax authorities can only charge Vietnamese advertising agencies and businesses that use Facebook and Google services.

Facebook and Google are known to use a complicated sales routing method to European countries in order to avoid tax, which makes it impossible for countries that use their services to collect tax from them.

Tax is just one reason why Vietnam’s government is seeking ways to control the two giants and other foreign companies’ activities in Vietnam. The other concern is internet security, which was the focus of the Wednesday meeting between the National Defense Committee (CNDC) and Diplomatic Committee.

Officials met to discuss a bill submitted last year, which requires foreign companies such as Facebook and Google to install servers and offices and store users’ data in Vietnam.

The bill faced strong opposition from international organizations and companies. The Vietnam Chamber of Commerce and Industry said the draft law went against the commitments Vietnam had made when it joined the World Trade Organization and EU-Vietnam Free Trade Agreement.

A joint letter sent by the U.S., Australian, Canadian embassies and the European Union in August 2017 also voiced strong concerns over the bill, saying it went against the trade commitments Vietnam had made.

The meeting concluded that foreign companies should not have to install servers in Vietnam.

However, authorities kept a clause in the bill stating that foreign businesses should have representative offices in Vietnam and that they should store Vietnamese users' data within the territory of Vietnam.

The CNDC said these requirements would help if there is a cross-border internet security breach involving Vietnamese users, while providing a way of removing any information posted against the Communist Party or government.