Vietnam: Taxation of e-commerce and digital-based transactions

Guidance—Circular 80/2021/TT-BTC—implements tax administration of foreign or overseas suppliers that do not have a permanent establishment in Vietnam but are conducting e-commerce and/or digital-based transactions and thus have income arising in Vietnam.

The effective date of the circular is 1 January 2022.

The Circular 80/2021 provides:

• A definition of in-scope e-commerce and digital based business activities and defines “digital-based business activities” as business activities of business entities through an intermediary digital system to connect with customers, all connection activities take place in a digital environment
• Tax registration, declaration and payment rules by the General Department of Taxation
  • When business-to-business (B2B) e-commerce and digital-based transactions are conducted by overseas suppliers that elect not to register to self-declare and pay tax in Vietnam, Vietnamese organizational customers will be responsible for declaring, withholding, and remitting the withheld taxes to the local tax authority.
  • When business-to-consumer (B2C) e-commerce and digital-based transactions conducted by overseas suppliers that do not register to self-declare and pay tax in Vietnam, Vietnamese commercial banks and Vietnamese payment intermediaries must declare, withhold, and remit the applicable taxes to the local tax authority on a monthly basis.
• Tax computation and applicable tax rates (generally depending on the type of activities undertaken and the nature of the fees charged)
• Tax treaty considerations
• Considerations for commercial banks and payment intermediaries (including information when commercial banks or payment intermediaries need to inform and instruct their branches to withhold taxes from the relevant B2C transactions)

Read an October 2021 report [PDF 92 KB] prepared by the KPMG member firm in Vietnam

Circular 80/2021 also provides guidelines for implementing certain tax administrative measures—including the tax payment allocation mechanism and principles of tax declaration and tax administration.

For instance, Circular 80/2021 clarifies the allocation of tax payments for taxpayers adopting a centralized accounting regime and that have dependent business units operating in provinces different from the province where the head office is located. According to Circular 80/2021, when taxpayers with centralized accounting with operations and business activities in provinces other than the head office, the tax declaration and submission will be centralized at the province of the head office, while the tax liability payment will be allocated to each province where the business is actually conducted.

Circular 80/2021 also addresses tax relief treatment under an income tax treaty and other international agreements. The tax authorities will issue a written notice as to whether the taxpayer is eligible for tax relief under an income tax treaty or other international agreement within 30 days (or 40 days if further investigation is warranted) from the date of receipt of the notification dossier.

Read an October 2021 report [PDF 209 KB] prepared by the KPMG member firm in Vietnam