Sign up for tax alert emails    GTNU homepage    Tax newsroom    Email document    Print document    Download document

October 29, 2021
2021-6122

Vietnam releases a Circular on digital tax

The Ministry of Finance in Vietnam released Circular 80/2021/TT-BTC on 29 September 2021 regarding the implementation of the country’s tax law, including a section on digital tax.1

The rules apply in cases where an overseas business that does not have a Permanent Establishment (PE) in Vietnam carries out the following activities to organizations, or individuals in Vietnam:

  • E-commerce

  • Digital platform-based businesses

  • Other related services

The Circular has a tax registration and declaration requirement that will be imposed once the online portal of the Tax Authority goes live (expected to be 1 January 2022). The overseas supplier can directly register for tax filings or authorize a Vietnamese party to do so on its behalf. The authorized party is defined to include an organization or a tax agent operating under the laws of Vietnam.

The Circular states that tax payable is calculated on revenue earned by the overseas supplier and different value added tax/corporate income tax rates will be applied depending on the nature of the activities conducted. Three sources of information are to be used to determine and identify transactions of an overseas supplier arising in Vietnam and it is the responsibility of the supplier to retain all related information used for determining Vietnam-sourced income in accordance with the Law on Tax Administration in the event of a future tax audit by the Vietnamese tax authority.

We note that if the overseas supplier comes from a country which has a tax treaty with Vietnam, it may be possible to submit a tax treaty claim for a corporate income tax exemption if it can be demonstrated that it does not operate through a PE in Vietnam.

The Circular also addresses the responsibilities of Vietnamese parties (including Vietnamese counterparties under business to business (B2B) supplies, and commercial banks/payment-service providers under business to consumer (B2C) supplies) in withholding, declaring and paying taxes on behalf of overseas suppliers should the overseas suppliers fail to do so.

The Circular is effective as of 1 January 2022.

_________________________________________

For additional information with respect to this Alert, please contact the following:

Ernst & Young Vietnam Limited, Ho Chi Minh City

Ernst & Young Vietnam Limited, Ha Noi

_________________________________________

Endnotes

  1. For background on Vietnam’s digital tax, see EY Global Tax Alert, Vietnam implements taxation of digital transactions, dated 13 July 2020.
 
 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 2024, Ernst & Young LLP.

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

 

"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

 

Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct