E-commerce platforms may have to collect VAT on behalf of their sellers
The General Department of Taxation is considering imposing VAT collection obligations – deemed supplier – on online marketplaces. This would require them to act as the VAT reporter instead of their third-party sellers of goods and digital services.
Separately, it is still reviewing restricting its VND 1million (approx €37 or $44) low value consignment relief. This exempts from VAT parcels imported from Vietnam destined for consumers.
Deemed supplier for digital platforms and intermediaries
The proposal to require e-commerce platforms to declare and pay taxes on behalf of sellers has sparked significant debate. Tax authorities argue that this is a feasible measure since platforms possess detailed data on sellers’ transactions, revenues, and applicable fees, allowing for efficient tax collection. Under this system, e-commerce platforms would function similarly to tax agents or intermediaries, collecting and remitting taxes—such as VAT—on behalf of sellers, especially in cases where sellers may not declare their taxes properly.
However, the Vietnam E-Commerce Association (VECOM) opposes this proposal, deeming it unreasonable. VECOM argues that imposing this responsibility on platforms could create additional administrative burdens and risks. In their view, platforms should not bear the tax liability for individual sellers, especially since the latter are the actual taxable persons responsible for reporting VAT and other tax obligations on their supplies of goods or services.
From a VAT perspective, the proposal suggests shifting the compliance burden from sellers (taxable persons) to digital platforms, essentially treating them as withholding agents. This could complicate the VAT system, where input VAT credits and output VAT liabilities are traditionally managed by the sellers themselves. Additionally, it challenges the principle that VAT is a transaction-based tax levied at each stage of the supply chain, where businesses collect tax on the value added, passing it along the chain until the final consumer bears the cost.
The proposal is part of broader discussions to modernize tax laws in response to the growing digital economy, which has made tax enforcement more complex, especially for cross-border transactions. A legal framework is also being considered to address counterfeit goods on e-commerce platforms, reflecting the need for stricter regulation of online marketplaces.
