New comments from VCCI on proposed e-commerce taxation

VIETNAM, May 31 –

A shipper delivers a product to a buyer. If an online transaction is paid for in cash, the money is transferred from buyers to sellers through senders, not through e-commerce platforms. — Photo

HÀ NỘI — The Vietnam Chamber of Commerce and Industry (VCCI) recently made additional comments on the draft decree amending Decree 126 on taxation and invoices, reiterating its disapproval of the payment of tax by platforms. e-commerce on behalf of sellers.

VCCI was concerned that the draft would leave e-commerce platforms with no choice but to pay the tax with their own money and then collect the tax from sellers. Unfortunately, collecting taxes is not an easy task given that 86% of online transactions are paid in cash, which puts them at risk.

“When transactions are paid in cash, money is transferred from buyers to sellers through senders, not through e-commerce platforms. In such cases, platforms have great difficulty remembering the tax because they do not have the power to enforce payment of the tax,” VCCI explained.

VCCI was also concerned that the project would add costs to e-commerce platforms as they have to incur new expenses related to tax recovery.

A study of 107 e-commerce platforms conducted by VCCI between April and May shows that their cost-to-revenue ratio would increase by 10.65 percentage points if the project were implemented.

“Over 80% of the platforms said they were operating at a loss and would continue to operate unprofitably in the coming years. The project, if passed, would place an additional burden on their finances,” said VCCI.

Notably, 70% of platforms believe it would be nearly impossible to pay taxes on behalf of sellers, and 100% fear they will have difficulty calculating sellers’ earnings, leading to underpayment and overpayment. of taxes.

In the draft, the notion of “representative” is defined as a mandatory (involuntary) and automatic responsibility (no authorization document required). The VCCI considered that such a definition is in contradiction with that of the Civil Code.

“Regulations that require e-commerce platforms to pay taxes on behalf of sellers have no legal basis to be valid and are inconsistent with other relevant legal documents,” VCCI said.

VCCI also said the draft is unclear as it does not define which e-commerce platform vendors are liable to pay the tax on behalf of all vendors or only those earning more than $100. million NV per year.

“According to current legal documents, only individual sellers who have annual revenues above 100 million VN are eligible for taxation,” VCCI pointed out.

If this is also the case under the draft, the platforms would have to detect high-income sellers to hold them taxable. Unfortunately, detecting taxable suppliers is a difficult task because no criteria are available to determine which suppliers exceed the revenue limit.

Economic expert Đinh Trọng Thịnh pointed out the tax principle that organizations and individuals should pay the tax themselves to invalidate the regulations.

He said e-commerce platforms are just intermediaries that connect online buyers and sellers, so it is irrational to hold them responsible for paying tax on sellers’ behalf.

As a result, VCCI called for changes to the draft, sparing e-commerce platforms the obligation to pay the tax on behalf of sellers. Instead, they should be required to disclose seller information to tax authorities.

It is proposed that the frequency of disclosure be annual, instead of quarterly as indicated in the draft. A lower frequency is supposed to help ease the hard work of information disclosure.

VCCI also called on lawmakers to add a clear definition of vendor revenue to the draft, which would be the sum of all revenue recorded on vendor invoices. —VNS

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