Payments for e-commerce transactions must be made via banks or authorised payment intermediary services, according to the draft of the amended Law on Tax Management (Photo: cafef.vn)

Hanoi (VNA) - Payments for e-commercetransactions must be made via banks or authorised payment intermediaryservices, according to the draft of the amended Law on Tax Management.

The draft law, which was recently released bythe Ministry of Finance (MoF) for recommendation, aims to better manage andcollect taxes on e-commerce businesses, which have developed strongly in Vietnamin recent years.

Besides the tax agency, it is necessary to haveclose co-ordination among other relevant ministries and agencies to make taxmanagement more effective, according to the draft law.

Accordingly, the MoF has proposed that the taxdepartment will build databases and apply electronic tax services, such aselectronic tax declaration, electronic invoices and online tax payments,ensuring that 100 percent of taxpayers will have access to these facilities tocatch up with e-commerce.

The State Bank of Vietnam (SBV) will takemeasures to develop e-commerce payments and to ensure that cross-borderservices pay through payment service suppliers or licensed payment intermediaryservices.

The MoF will co-ordinate with SBV in guidingcommercial banks to deduct the tax that foreign social networking sites, suchas Google, Facebook and YouTube, have to pay when they transfer money fromorganisations and individuals to the sites.

Under the current legal regulations, everybusiness or individual, regardless of having a business registrationcertificate or not, that earns over 100 million VND (4,400 USD) from tradingactivities, including those on social media operating as e-trading floors, mustregister, declare and pay taxes.

However, tax authorities find itchallenging to tax e-commerce businesses as it is not easy to control onlinebusiness revenues given cash payment is so common in Vietnam.

Currently, individual traders mainly paypersonal income tax based on taxpayers’ declarations. To declare and pay taxes,individual traders must register their tax codes with the tax authorities. Butonline traders are reluctant to make tax declarations, while the taxauthorities’ facilities and personnel for tax inspection and collection arelimited, failing to catch up with the swift growth of e-commerce. The commonpractice of cash transactions in Vietnam also makes it impossible to determinethe exact income of online shops.

In developed countries, tax enforcement andcontrol mechanisms are mostly based on declarations of taxpayers, but mosttransactions are made via bank accounts rather than in cash, helping securefull and accurate declaration by taxpayers.

🧔 Experts therefore suggested that Statemanagement agencies should adopt measures to encourage online payment andreduce cash transactions to help oversee revenues of online traders. Thereshould also be closer coordination between concerned authorities andintermediary payment banks.-VNA