November 16, 2018 14:22

Advertisement Contact us RSS Vietnamese

Draft law designed to lift banks’ role in e-commerce

20:06 | 08/05/2018

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

draft law designed to lift banks role in e commerce

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)

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

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

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

The State Bank of Vietnam (SBV) will take measures to develop e-commerce payments and to ensure that cross-border services pay through payment service suppliers or licensed payment intermediary services.

The MoF will co-ordinate with SBV in guiding commercial banks to deduct the tax that foreign social networking sites, such as Google, Facebook and YouTube, have to pay when they transfer money from organisations and inpiduals to the sites.

Under the current legal regulations, every business or inpidual, regardless of having a business registration certificate or not, that earns over VND100 million (US$4,400) from trading activities, including those on social media operating as e-trading floors, must register, declare and pay taxes.

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

Currently, inpidual traders mainly pay personal income tax based on taxpayers’ declarations. To declare and pay taxes, inpidual traders must register their tax codes with the tax authorities. But online traders are reluctant to make tax declarations, while the tax authorities’ facilities and personnel for tax inspection and collection are limited, failing to catch up with the swift growth of e-commerce. The common practice of cash transactions in Vietnam also makes it impossible to determine the exact income of online shops.

In developed countries, tax enforcement and control mechanisms are mostly based on declarations of taxpayers, but most transactions are made via bank accounts rather than in cash, helping secure full and accurate declaration by taxpayers.

Experts therefore suggested that State management agencies should adopt measures to encourage online payment and reduce cash transactions to help oversee revenues of online traders. There should also be closer coordination between concerned authorities and intermediary payment banks.

Source: VNA