According to the Ministry of Finance, most global technology companies did not register their business or have official representative offices in Vietnam while their transactions were cross-border, making it hard to calculate and collect taxes.
For example, Google and Facebook provided online advertising services in Vietnam in two ways. The first was through agencies in Vietnam and the second was conducted through online payment via credit cards or e-wallets.
The ministry said that it was difficult to clarify the real values of transactions conducted in the second way.
Co-operation with foreign tax agencies and Internet services providers should be taken to better manage values of e-commerce transactions and banking payments.
In addition, it was also not easy to verify advertising revenues from click counts of foreign Internet companies as doing this would require checks of payment transactions at banks of both buyers and services providers but banks of foreign Internet companies were mostly abroad.
“The tax management of online businesses faces difficulties in clarifying taxpayers, revenues, business scale and transaction history,” the ministry said, adding that co-ordination between relevant ministries and agencies must be enhanced to better manage tax collection from e-commerce businesses.
Accordingly, the finance ministry proposed the State Bank of Vietnam to study the regulation of requiring cross-border payment transactions to be conducted through local payment gateway of the National Payment Corporation of Vietnam.
Only by this, could tax watchdogs manage values of cross-border transactions to impose tax, the ministry said, adding that many countries in the world such as European countries, India and Korea, had such a regulation.
The finance ministry also proposed the Ministry of Information and Communications to require foreign technologies companies such as Google, Facebook and Apple to declare and pay foreign contractor tax on the services provided to Vietnamese organizations or individuals.
The ministry also called for enhanced co-operation with foreign tax agencies and Internet services providers like VDC, FPT, Mobifone, Vinaphone and Viettel to better manage values of e-commerce transactions and banking payments.
For individuals selling things online, the finance ministry proposed to impose value added tax and individual income tax on products with prices above VND1 million (US$44) and when transacted two times per day or more.
The ministry said that business through social network pages was booming in Vietnam but tax management was still lagging behind. It proposed investigation function to be empowered to tax watchdogs, adding that some 80 countries in the world currently had tax investigation bodies.