10 July 2017

Facebook business to pay five percent revenue tax

HCM City (VNA) – Small and home-based business owners who
use the Facebook platform to sell products and have revenue of more than 100
million VND (4,500 USD) per year will be taxed at five percent.

The money will be paid through a tax registration, value added tax, personal
income tax and other taxes depending on the goods they sell.

“With revenue of over 100 million USD each year, a business on Facebook paying
nearly 2 million VND (90 USD) for tax is acceptable,” Nguyen Thai Son, a
taxation consultant, said in the Thanh Nien (Young People) newspaper.

The tax level for those who have the same revenue in a traditional business is
around four times higher, nearly 8 million VND (360 USD), he said.

In early June, the HCM City and Hanoi Taxation Departments sent 13,400
notifications to Facebook businesses and over 1,000 businesses contacted with
tax officials in HCM City.

“To reduce tax losses from online business, tax authorities have worked with
Facebook, Google and Apple Store to have e-commerce accounts, worked with banks
regarding revenue and worked with police to have a list of those who haven’t
paid tax,” Le Thi Thu Huong, deputy head of the HCM City Taxation Department
said.

“The taxation department will collect information from different sources and
publish names of organisations and individuals who evade taxes, as well as
request relevant authorities to close any e-commerce websites if they do not
pay tax,” she added.

Hương also said that individuals who have online business in social media will
be provided a taxation registration and code.

In developed countries, all people and organisations are required to declare
income and pay taxes.

“Collecting taxes on sales through social networks is necessary,” Huong added.

Bui Quang Tin, a lecturer in business administration at HCM City University
of Banking, said that transactions on the Internet are difficult to control and
collecting taxes should be done step by step.

Initially, there should be requirements that all individuals conducting
business via Facebook must register their operations and declare their income.

He also noted that with millions of Facebook accounts, in the first phase, the
tax authority should target large and professional businesses, because many
individual dealers operate as side jobs, or even seasonal businesses. If it tried
to control all of them, it would use significant resources and probably be
inefficient. The difficulty in managing online sellers and collecting
taxes is said to be the consequence of the low rate of non-cash transactions in
Vietnam.

According to an official estimation, e-commerce activity has been booming, with
80,000 active websites in the city, half of which run stable operations, but
tax collection in the field was very poor, especially sales activities through
Facebook.

In fact, in 2015, revenue from e-commerce in Vietnam reached 4.1 billion USD,
an increase of five times compared with 2012. It is expected to reach 10
billion USD by 2020, accounting for 5 percent of total retail sales in the
country. Therefore, e-commerce will play a significant role in the Vietnamese
retail sector in the future.-VNA 



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