Collection of tax from online business becomes easier

The Hai Chau district taxation agency in Da Nang City has confirmed that it collected the tax arrears of VND25.3 billion from one individual. N.N.D, who lives in Da Nang, had revenue of VND281 billion from ad services paid by Google from 2015 to June 2018.

The Hanoi Taxation Agency reported that the amount of tax collected from e-commerce activities in 2020 was five times higher than 2019. Some individuals came to the agency to declare and pay tax.

A woman, 28, in Cau Giay district, reported revenue of VND330 billion and paid tax of VND23.4 billion.

A man, 30, also in Cau Giay district, had revenue of VND260 billion from his software products used by apps worldwide and paid tax of VND18.1 billion.

As individuals do not have accounting books, it is difficult to define the input cost and the output. Therefore, the state sets a fixed added value percentage, depending on the business field.

Under current laws, those who develop software and have revenue from ads have to pay 5 percent of VAT and 2 percent of total revenue in personal income tax.

According to Nguyen Van Duoc, CEO of Trong Tin Accounting Service, the Law on Tax Administration N0 38 and Decree 126 has provisions which say individuals doing business via internet must declare and pay tax.

The law also stipulates that credit institutions and commercial banks should provide information about taxpayers’ accounts to the taxation agency.

“If accounts show VND300 billion or higher paid to owners, this is surely money from business. If individuals don’t declare and pay tax in accordance with the current laws, the taxation agency will discover their tax evasion one day,” he said.

In Vietnam, online businesses have been developing strongly in recent years. People buy and sell goods, and provide services and post ads on TV, e-commerce websites and foreign social networks.

Since July 1, 2020, when the Law on Tax Administration N0 38 which includes regulation on tax administration for e-commerce activities, took effect, tax collection from activities has been under control.

In 2020, Hanoi collected VND123 billion in tax from e-commerce. In 2017, the Hanoi Taxation Agency sent 13,000 messages to subscribers who had addresses for selling goods on social networks and reported that over 2,000 individuals followed procedures to register for tax declaration.

Any behavior of tax evasion will be fined, or even prosecuted if necessary.