Most online transactions in Vietnam involve cash, which is difficult to track and tax. District tax departments in Ho Chi Minh City have sent out tax demands to nearly 13,500 Facebook retailers in a move to target tax avoidance by online businesses.
Since February, Vietnam’s tax authorities have been looking at ways to collect taxes from online businesses that use Facebook and other social media sites such as Instagram and Youtube.
Nguyen Nam Binh, deputy director of Ho Chi Minh City’s Tax Department, told VnExpress that the law requires online retailers earning over $4,400 a year to declare tax, so authorities are only targeting long-term and unregistered businesses.
Despite the requests, Binh Thanh District’s tax department said the response had been limited.
“Most business owners said their business were short-term and their revenue was not high enough to warrant the tax requirements”, said a department representative.
In February, Facebook representative Huynh Kim Tuoc said at a conference that Vietnam’s e-commerce environment is thriving, with about 50 young people having already earned millions of dollars through online businesses.
Local businesses in HCMC also told us their revenue rose significantly after they switched online, with some reporting earnings of up to tens of thousands of dollars per month.
Chairman of Vietnam Tax Consultant Association Nguyen Thi Cuc told us that Vietnam’s tax policy for online businesses is incomplete and therefore not yet compulsory, adding that it’s difficult to collect taxes from online retailers in Vietnam as most transactions are still in cash.
Vietnam is also struggling to control business activities from transnational corporations like Facebook and Google, she added.
