Vietnam’s Proposed VAT Law Amendments Target E-Commerce and Digital Platforms for Enhanced Compliance

• In October 2024, Vietnam’s Government submitted a draft amended VAT law to the National Assembly.
• The amendments focus on taxing foreign suppliers in e-commerce and digital platforms operating in Vietnam.
• Key categories of taxpayers affected include:
• Foreign Suppliers: Entities without a permanent establishment in Vietnam selling to Vietnamese customers.
• Platform Managers: Organizations managing foreign platforms responsible for VAT compliance.
• Vietnamese Business Organizations: Domestic entities purchasing services from foreign suppliers.
• E-Commerce Platform Operators: Entities managing platforms that handle payments and tax remittance.
• Proposed tax implications include:
• Fixed VAT rates of 10%, 5%, or exemptions based on income type, replacing varying rates.
• Input VAT credits for Vietnamese businesses based on documentation from foreign suppliers.
• No changes to Corporate Income Tax (CIT) obligations; foreign suppliers will continue to pay 5% CIT on taxable revenue.
• Impacts on stakeholders:
• VAT-taxable businesses can credit increased input VAT against output VAT.
• Non-VAT taxable businesses and individual consumers may face higher indirect tax costs.
• Foreign suppliers must ensure compliance with new tax regulations and documentation.
• The amended VAT law is expected to be passed in late November 2024 and take effect on July 1, 2025.
• The changes aim to modernize Vietnam’s tax regime to better address the digital economy’s complexities.

Source: aslgate.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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