Vietcomank proposes not to pay taxes on behalf of foreign entities without physical presence in Vietnam
Vietcombank, one of the Big 4 Vietnamese banks, has proposed removing a regulation that requires commercial banks to withhold and pay taxes on behalf of foreign organizations and individuals that earn income from commercial activities in Vietnam but do not have physical presence in the country.

The headquarters of Vietcombank in Hanoi. Photo courtesy of the bank.
According to the government's Decree 126/2020/ND-CP dated October 19, 2020, commercial banks must withhold and pay taxes on behalf of foreign entities and individuals having income generated in Vietnam but no physical presence in the country.
The tax authority shall publish a list of foreign suppliers, including their names and websites that have not registered for taxes in Vietnam. Based on this list, banks are required to carry out tax withholding and payment on their behalf.
In its official feedback on the draft adjusted Law on Tax Administration, Vietcombank proposed eliminating this requirement.
It argued that banks merely execute fund transfer orders based on customers’ orders. These orders typically include the customer’s name, bank account number, and the bank’s name but do not contain website information.
As such, website data provided by tax authorities cannot be used to identify whether the customer falls into the category subject to withholding.
Additionally, foreign suppliers from different countries may have similar or identical names, so relying solely on the name to determine tax liability can lead to incorrect withholding.
Vietcombank also noted that banks do not participate in the transactions, so they lack the context to determine the nature of the transaction. Moreover, they are not equipped to identify the specific business sector involved or calculate the applicable withholding tax rate.
The bank further emphasized that the requirement for commercial banks to withhold taxes under the 2019 Law on Tax Administration is impractical and not in line with international practices.
For example, developed countries like the U.S., Australia, and EU nations do not require banks to withhold taxes for foreign sellers. Instead, the Organisation for Economic Co-operation and Development (OECD) recommends that digital platforms be responsible for tax registration, declaration, and payment on behalf of sellers in e-commerce.
Similarly, Law No. 56/2024, which amends several laws including the Law on Tax Administration, stipulates that foreign suppliers must either directly or via authorized representatives register, declare, and pay taxes on income from e-commerce, digital platforms, and other activities.
In response, the Ministry of Finance stated that it would consider and review Vietcombank's proposal.
According to data from the tax authorities, total revenue from e-commerce activities by foreign organizations and individuals from 2022 to 2024 reached approximately VND296 trillion ($12.32 billion). The figure in the first half of this year hit VND98 trillion ($3.75 billion), up 58% year-on-year.
During H1, 163 foreign suppliers registered, declared, and paid taxes via the electronic tax portal, with a total amount of VND5.7 trillion ($217.94 million), an increase of 41% compared to the same period last year.
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