E-commerce platforms disapprove of suggestion to pay tax on behalf of sellers
A representative of the Vietnam E-Commerce Association revealed three obstacles in the way of e-commerce platforms that make it impossible to pay tax in sellers' stead.
The first obstacle is that e-commerce platforms, in most cases, have little knowledge of all the tax codes and tax rates applicable to sellers' items. The platforms cannot calculate sellers' taxes properly without this tax information.
The second obstacle involves the absence of a digital system that enables e-commerce platforms to declare and pay tax on sellers' behalf and allows tax authorities to check whether a specific transaction generates revenues.
The third obstacle centres around the payment method that is preferred by buyers in Viet Nam - cash on delivery. Buyers paying in cash make it difficult for e-commerce platforms to monitor the revenues realised by sellers, adding complexity to tax calculation.
Nguyen Tran Hung, head of the Economic Information Systems and E-Commerce Faculty at the University of Commerce, remarked that it is not easy to tax sellers who operate on multiple digital platforms.
If the sellers use sale management software on those platforms, the platforms could rely on revenue data stored in the software to calculate sellers' taxes. Otherwise, tax authorities must make it mandatory for sellers to disclose their data to the platforms to enable tax calculation.
"If sellers do not use sale management software, data sharing needs to be made mandatory to enable tax calculation", said Hung.
According to Hung's suggestion, data disclosure should include sellers' revenue, profit, number of transactions, and items sold to help e-commerce platforms monitor sellers' cash flows more closely.
Bui Ngoc Tuan, deputy director of the Tax Advisory Service at Deloitte Vietnam, held that tax deduction at source is only possible as long as e-commerce platforms are given the authority to collect tax from sellers.
The deputy director called for a digital system that allows e-commerce platforms to monitor sellers' sales on a real-time basis to check their taxable income better. He also urged tax authorities to tighten the legal framework to prevent new tax avoidance and evasion practices.
Nguyen Minh Cuong, chief economist of the Asian Development Bank, shared Tuan's view, saying that digital technology holds the key to effective e-commerce taxation.
He took the search engine for tax classification as an example. The engine enables tax authorities to quickly detect fraudsters online, effectively curbing illegal practices among e-commerce taxpayers.
He also said Viet Nam could learn from South Korea's experience before developing their e-commerce taxation.
South Korea has established an independent department in charge of e-commerce tax, tasked with collecting and analysing revenue data declared by e-commerce enterprises and imposing fines on those involved in tax frauds.
On December 15, 2022, the General Department of Taxation launched a national portal through which e-commerce taxpayers are required to disclose their data to the tax authority.
By 13 February, 258 e-commerce platforms, 14,883 organisations, and 53,212 individuals have registered on the portal to comply with the requirement.
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