Digital giants pay VND 5,100 trillion in taxes in Vietnam!

Digital giants pay VND 5,100 trillion in taxes in Vietnam!

Over the past four months, foreign providers such as Facebook (Meta), Google, TikTok and Microsoft have paid taxes worth about VND5,100 billion to Vietnam. These figures were released by the tax authority, the Ministry of Finance, and represent a remarkable increase of 93.6% compared to the previous year. The collection of taxes comes in the context of the growing importance of e-commerce and digital transformation in Vietnam.

From May 19, the e-commerce tax department will take over the direct management of foreign suppliers. This will replace the previous tax department for large companies in order to make administration more efficient. The exchange of procedures for registration, declaration, tax payment and information sharing continues to take place via the electronic information portal for foreign suppliers.

Changes to VAT legislation

In addition to the current developments, the National Assembly of Vietnam passed a new VAT law (VAT Law No. 48/2024/QH15) on November 26, 2024. This law will come into effect on July 1, 2025, replacing the current VAT Law of 2008. Key changes include the expanded definition of “taxable person,” which now includes foreign providers engaged in e-commerce or digital business with Vietnamese companies.

According to the new law, organizations that operate digital platforms and withhold and pay taxes for foreign providers are also considered taxpayers. Companies that operate e-commerce platforms and pay taxes for business owners and individuals are also covered by the new regulation.

Tax rates and regulations

The changes also include the setting of tax rates. The general rate of 10% applies to most goods and services, while a reduced rate of 5% applies to certain basic goods as well as medicines and agricultural products. The 0% rate remains in place for exported goods/services and certain services for overseas consumption.

For foreign providers without a permanent establishment in Vietnam, a rate of 10% is due for e-commerce services. In addition, the turnover limit for tax exemption will be increased from VND 100 million to VND 200 million.

Another significant change concerns the rules on the requirement to provide proof for claiming input tax amounts, where the cash proof threshold of VND 20 million is abolished.

The planned tax administration adjustment is part of efforts to improve specialization, support, transparency and efficiency in tax declaration and payment for cross-border companies. Loud Vietnam.vn the tax authority expects significant progress in this area.

The new legislation aims to meet the challenges of the digital economy and clarify tax obligations for foreign providers, which the tax authority also sees as urgent to adapt to the development of cross-border e-commerce.

The adjustments and new requirements will also help to further increase the quality of revenue in the e-commerce sector, which is essential in a rapidly changing economy.

Further information about the changes in the VAT law and their impact on foreign companies can be found on the website BDO.