Vietnam requires e-commerce platforms to pay taxes on behalf of selllers starting 2025

Starting January 1, 2025, e-commerce and digital platforms will be required to declare and pay taxes on behalf of sellers operating on their platforms, according to Vietnam's amended Law on Tax Administration.

On Friday, the country's parliament, the National Assembly, passed nine amendments to the law with nearly 93% of the vote.

Under the revised law, both domestic and foreign e-commerce platforms and digital service providers must deduct and pay taxes on behalf of their sellers and declare the deducted tax amounts.

If a seller is not eligible for tax deduction and payment by the platform, the seller must directly register, declare, and pay taxes.

The government will issue detailed guidelines on the procedures and responsibilities for tax declaration and payment.

Additionally, international suppliers operating on e-commerce and digital platforms, like Facebook, Apple, TikTok and Google must either directly register and pay taxes in Vietnam or appoint an authorized representative to do so.

Addressing concerns raised during discussions, Le Quang Manh, Chairman of the Finance and Budget Committee, noted that some had opposed the removal of the phrase "no permanent establishment in Vietnam" for foreign suppliers, saying it might be inappropriate.

However, the Ministry of Finance defended the change, stating it aligned with international trends and would ensure fairer tax management.

It argued that the amendment would provide a legal framework for tax authorities to compel foreign suppliers to register and pay taxes through the Electronic Information Portal for Foreign Suppliers, reducing tax losses in the e-commerce and digital sectors.

Currently, sellers on platforms like Shopee, Lazada, and TikTok Shop are responsible for self-declaring and paying taxes. The platforms are only required to provide seller information to tax authorities.

Since the launch of the Electronic Information Portal in March 2022, 102 foreign suppliers, including Meta (Facebook), Google, TikTok, and Netflix, have registered and paid over VND18.6 trillion ($734 million) in taxes. Vietnamese authorities have deducted and paid an additional VND 4.05 trillion ($160 million) on behalf of suppliers.

For domestic e-commerce platforms, tax collection began this year, with Hanoi alone collecting VND35 trillion ($1.38 billion) by early November.

The newly passed law also introduces penalties for independent auditors. Violators, whether individuals or organizations, may face administrative sanctions, criminal prosecution, or state-imposed measures, depending on the severity of the violation. Compensation for damages will also be required as stipulated by law.

The maximum fine for auditing violations is VND2 billion ($78,906) for organizations and VND1 billion ($39,453) for individuals, with a five-year statute of limitations. The government will issue detailed regulations regarding these sanctions.

During earlier discussions, there were suggestions to increase the maximum fine to twice the current level and shorten the statute of limitations to two years due to a shortage of auditors relative to market demand.

However, the Standing Committee of the National Assembly determined that the maximum fines would apply only to serious violations, short of criminal prosecution. The government has been tasked with assessing the impact and outlining specific penalties in a forthcoming decree.