E-commerce platforms should pay tax on vendors' behalf: ministry

The Ministry of Finance wants e-commerce companies such as Shopee, Tiki and Lazada to pay taxes on behalf of their vendors to simplify administrative procedures.

In a recent draft decree that is awaiting government approval, the ministry repeated its proposal from last year that was met by objections from e-commerce platforms who said it would increase their costs and that they were "not capable" of filing and paying taxes on behalf of vendors.

It said since the platforms control everything in a sale process from ordering to payment and know each vendor’s revenues, they are fully capable of doing this.

It is an optimal solution that would simplify administrative work as one platform could pay taxes for hundreds of thousands of people, it pointed out.

If the decree is approved, e-commerce companies will have to pay 1.5% of each vendor's revenues in excess of VND100 million (US$4,250).

As of 2020 Shopee had 210,000 vendors and Tiki had over 8,800, according to tax authorities.

There are around 100 active e-commerce platforms in Vietnam.

Tax officials have said that the current taxation regime is unfair to traditional sellers since online sellers avoid paying several taxes.

Taxing sellers through e-commerce platforms would also help keep out contraband and fake goods, they added.

The e-Conomy Southeast Asia 2021 report by Google, Temasek and Bain & Co. forecasts Vietnam to surpass Thailand by 2025 to become the second biggest Internet economy in Southeast Asia at $57 billion, behind only Indonesia ($146 billion).