Cross-border tax collection: Is it possible to solve the problem of collecting enough and collecting taxes correctly?

Tax declaration via electronic portal

Three days ago, businesses doing business on cross-border platforms in Vietnam started declaring and paying taxes online, without having to submit hard copies. Tax authorities will coordinate with competent authorities to take measures to handle according to law provisions in case foreign suppliers fail to comply with tax obligations in Vietnam.

Cross-border commercial transactions temporarily understood as commercial transactions between Vietnamese organizations and individuals and foreign organizations and individuals in the Vietnamese territory. These transactions are being divided into 2 main groups.

Group 1 includes businesses providing services or content platforms, advertising such as Google, YouTube, Netflix. Group 2 includes businesses providing e-commerce platforms such as Facebook, Amazon.

If in the past, taxing these businesses was a difficult problem, seeing but not knowing how to solve, now there is an additional tool to collect tax from these businesses.

Accordingly, foreign suppliers can access the website: https://etaxvn.gdt.gov.vn, to register, declare and pay tax

“Foreign e-commerce service providers are responsible for finding out their tax obligations in Vietnam and conducting tax registration on the electronic portal for foreign suppliers, thereby implementing declare and pay taxes to ensure compliance with tax laws in Vietnam,” said Mr. Roert King – Head of Tax Department, E&Y Vietnam Company.

Having a separate application for foreign suppliers will create a level playing field between traditional business and e-commerce, especially cross-border business.

Cross-border tax collection not easy

According to the Ministry of Finance, in 2020, the tax revenue from cross-border digital services is nearly 1,144 billion VND, last year increased to more than 1,300 billion VND. Tax collection for businesses operating on digital platforms without national borders has been a headache for tax authorities for many years. The amount of tax collected is not commensurate with the revenue of digital platforms.

With a cross-border operating model, there is no legal entity to manage in Vietnam, it is very difficult to manage, monitor and collect information and data, making tax declaration, tax calculation and payment inaccurate. corpse.

Illustration – Photo: Dan Tri.

Recently, in response to the National Assembly, Minister of Finance Ho Duc Phuc said that in the past time, the management of tax collection for cross-border goods and services, according to current regulations, is done through tax collection. through organizations in Vietnam (tax paid on behalf of foreign contractors) with an average revenue of over 1,000 billion VND per year.

According to the Minister, from 2018 to the end of December 2021, these units have declared and paid taxes with a total amount of more than VND 4,400 billion. Some large corporations like Facebook are 1,694 billion VND; Google is more than 1,618 billion; Microsoft more than 576 billion. In 2020, tax revenue from cross-border digital services will reach 1,143 billion VND, last year reached 1,318 billion VND (equivalent to 115% compared to 2020).

Previously, the General Department of Taxation said that there are currently 15 large corporations and technology companies in the world operating across borders with large incomes in Vietnam. In which, Vietnam’s online advertising revenue alone is about 1 billion USD. The duo Google and Facebook account for more than 80%, or more than 800 million USD, according to a report of Vietnam Digital Marketing Trends 2021.

Meanwhile, despite collecting billions of dollars in revenue each year, the amount of tax collected by Vietnam from the above 15 corporations is very meager, just over 1,000 billion VND per year. In particular, this amount is not paid by them, but forces contractors and agents to pay, declare and pay contractor tax through a paying organization in Vietnam.

The foundation of tax collection still has to be data, while data cross-border tax collection is even more difficult. Is this a concern in cross-border tax collection? Is the expectation that the cross-border tax collection tool can prevent revenue loss too much?

Around the above issues, the program Events and Comments With the participation of Mr. Nguyen Van Phung – Director of Large Corporate Tax Department, Ministry of Finance and Mr. Hoang Thuy Duong – Deputy General Director of Tax consulting in Vietnam, KPMG has analyzed and commented on the analysis. detailed discussion.

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