Amendment to tax regulation on foreign suppliers proposed

Under the proposal, the Government plans to clear up rules on foreign businesses which have argued that they do not have a fixed base in Việt Nam.
Many foreign suppliers take advantage of the double tax agreements to avoid tax obligations. Photo cafef.vn
Many foreign suppliers take advantage of the double tax agreements to avoid tax obligations. Photo cafef.vn

HÀ NỘI — The Government has recently proposed to amend a regulation of the Law on Tax Administration to better manage tax for foreign suppliers.

Under the proposal, the Government plans to clear up rules on foreign businesses which have argued that they do not have a fixed base in Việt Nam and are demanding huge tax refunds.

Under the current Clause 4, Article 42 of the law, for e-commerce business, digital-based business and other services of foreign suppliers ‘without having a permanent establishment’ in Việt Nam, the foreign suppliers are directly obliged to or authorise tax registration, tax declaration and tax payment in Việt Nam.

The ministry proposes to remove the phrase ‘without having a permanent establishment in Việt Nam’ in Clause 4, Article 42. The amendment will create many changes in the way that Việt Nam imposes tax on foreign suppliers.

Many foreign suppliers such as Meta, Google and Netflix are requesting Việt Nam’s tax authorities to refund the corporate income tax they paid because they do not have a permanent establishment in Việt Nam.

The amount of tax requested to be refunded is up to thousands of billions of Vietnamese đồng.

Many experts agreed with the Government’s proposal, saying that to ensure fairness among taxpayers as well as the responsibility of foreign suppliers to fulfil their tax obligations to the Vietnamese state, the phrase ‘without having a permanent establishment in Việt Nam’ should be removed.

According to lawyer Nguyễn Duy Nguyên, General Director of Hoàng Giao Law Firm, Clause 4, Article 42 stipulates the principles of tax declaration and calculation for e-commerce business, digital-based business and other services that are performed by foreign suppliers without having a permanent establishment in Việt Nam.

Thus, foreign suppliers with a permanent establishment in Việt Nam will not be directly or authorised to register for tax, declare tax and pay tax in Việt Nam. In this case, the foreign suppliers have the right to only perform the obligation to pay corporate income tax on the portion of profits allocated to permanent establishments according to the provisions of the Law on Corporate Income Tax and the Double Taxation Avoidance Agreement.

Meanwhile, according to the provisions of the Law on Value Added Tax and the Law on Corporate Income Tax, when foreign suppliers conduct e-commerce business, digital-based business and other services in Việt Nam, they are subject to corporate income tax and value added tax. This makes it difficult to collect taxes from foreign e-commerce service providers, such as in the case of online booking service providers Booking and Agoda.

“In my opinion, to create fairness among taxpayers and ensure adequate revenue for e-commerce activities, it is necessary to remove the phrase ‘without having a permanent establishment in Việt Nam’ under Clause 4, Article 42 on tax declaration and calculation principles,” Nguyên said.

The General Department of Taxation (GDT) also believes that retaining the phrase ‘without having permanent establishment’ may no longer be suitable for the current e-commerce business. Online transactions do not require a physical presence such as office, factory or staff in Việt Nam, so determining a permanent establishment becomes more complicated.

According to the GDT, double tax avoidance agreements (DTAs) were signed many years ago, but mainly applied to traditional business activities with a physical presence. Meanwhile, e-commerce business operates mainly in cyberspace, without a physical presence, which causes the application of current tax regulations to become inappropriate.

Economist Dr. Đinh Trọng Thịnh also said the application of DTAs was causing difficulties in determining tax liability. Many foreign suppliers took advantage of the DTAs to avoid tax obligations. This was a concern, especially when corporate income tax from e-commerce transactions could become an important source of revenue for the national budget in the future.

Therefore, Thịnh believes amending the provisions in Clause 4, Article 42 will open up opportunities for tax authorities to manage taxes more effectively. If the phrase ‘without having a permanent establishment’ is removed, tax authorities will have a legal basis to require foreign suppliers doing business in Việt Nam to fulfil tax obligations, regardless of whether they have a permanent establishment in the country or not.

The removal of the phrase ‘without having a permanent establishment’ in the law is a necessary step in reforming the tax system in Việt Nam. This not only ensures the State's right to collect taxes but also creates a clear legal framework for foreign suppliers operating e-commerce businesses in Việt Nam.

Source: VNS

See also

Amended Electricity Law proves MoIT’s institutional improvement success

Amended Electricity Law proves MoIT’s institutional improvement success

(VEN) - The amended Electricity Law has been recently passed by the National Assembly, marking a new milestone deeply influenced by the Ministry of Industry and Trade (MoIT) in enhancing the institutional framework in a “rapid” spirit.
Ministry proposes extending agricultural land tax exemption through 2030

Ministry proposes extending agricultural land tax exemption through 2030

The Ministry of Finance has proposed the National Assembly extend the agricultural land tax exemption until December 31, 2030, a move aimed at encouraging investments in agriculture and rural areas to improve the competitive edge of the agricultural products amidst deeper international integration.
Gov

Gov't targets to gradually make English second language at schools by 2030

The Government has approved a plan for international cooperation in the field of education and training until 2030 in order to improve the quality of workforce for socio-economic development.
Nine newly-adopted laws made public

Nine newly-adopted laws made public

The Presidential Office on December 20 announced the President’s order to make public nine new laws that were passed by the 15th National Assembly at its eighth session.
Resolution on construction of North-South high-speed railway issued

Resolution on construction of North-South high-speed railway issued

National Assembly Chairman Tran Thanh Man recently issued a resolution on the investment policy for the North-South high-speed rail project.
PM requests no one be left behind in apparatus restructuring

PM requests no one be left behind in apparatus restructuring

Prime Minister Pham Minh Chinh on December 17 requested the development of regimes and policies to ensure the legal and legitimate rights and interests of officials, civil servants, public employees, and labourers in the restructuring of the organisational apparatus, with no one left behind.

See more news

PM urges combating group interest during apparatus restructuring

PM urges combating group interest during apparatus restructuring

Prime Minister Pham Minh Chinh on December 12 highlighted the need to counteract group interests and personal gains during the restructuring process of the organisational apparatus, and develop appropriate policies to safeguard officials and public servants’ legitimate rights and interests.
Vietnam viewed as a priority in India

Vietnam viewed as a priority in India's Act East policy

The Secretary (East) at the Indian Ministry of External Affairs has highlighted Vietnam as one of the first countries with which India has engaged in a multi-dimensional manner as part of the South Asian nation’s Act East policy.
Australia shows interest in Việt Nam

Australia shows interest in Việt Nam's vision of a 'rising era'

Việt Nam and Australia shared a vision of a peaceful, stable, and prosperous region and the relationship between Việt Nam and Australia have been growing fruitfully in all sectors.
Plan to streamline Government

Plan to streamline Government's organisational apparatus finalised

According to Minister of Home Affairs Phạm Thị Thanh Trà, the government's restructuring extends beyond ministerial consolidation, and the number of units under ministries and ministerial-level organisations will be cut by 15-20 per cent
Vietnam slashes government apparatus, with 9 minitries, agencies cut

Vietnam slashes government apparatus, with 9 minitries, agencies cut

Hanoi – Nine ministries and agencies under the Government will be consolidated under a resolution on streamlining and optimising the political system, Minister of Home Affairs Pham Thi Thanh Tra told the Vietnam News Agency.
Specific plans announced to restructure Party apparatus

Specific plans announced to restructure Party apparatus

The plan will reduce at least four Party organisations, 25 Party delegations and 16 Party groups merged into others and add two more Party Committees under central management.
Streamlining political system: Time does not wait

Streamlining political system: Time does not wait

Achieving strategic goals not only requires extraordinary efforts and exceptional commitment but also does not allow any delay or slackening, with a revolution to build a truly elite and streamlined political system promptly carried out, the Party leader underscored.
Gov

Gov't urges stronger efforts in thrift practice, wastefulness prevention

HÀ NỘI – Prime Minister Phạm Minh Chính on Sunday signed an official dispatch demanding ministries, sectors, and localities to promote thrift practice and wastefulness combat.
2-per-cent VAT reduction extended to the end of June

2-per-cent VAT reduction extended to the end of June

HÀ NỘI — The National Assembly has approved an extended reduction of value added tax (VAT) from 10 per cent to 8 per cent until the end of June.
Ministries, state agencies to undergo mergers in national apparatus overhaul

Ministries, state agencies to undergo mergers in national apparatus overhaul

HÀ NỘI — According to proposals announced at a national conference held on Sunday, five ministries and two government agencies will be included in mergers to streamline and optimise the political system.
View more
Latest Most Read
Lao Cai – Hanoi - Hai Phong railway to foster Vietnam - China trade

Lao Cai – Hanoi - Hai Phong railway to foster Vietnam - China trade

(VEN) - The Lao Cai-Hanoi-Hai Phong railway will attract a large amount of goods and passengers, contributing to opening a trading gateway between Vietnam and China.
Ninh Binh promotes green tourism development

Ninh Binh promotes green tourism development

(VEN) - Like the central province of Quang Nam, the northern Ninh Binh Province is considered a model for ensuring harmony between tourism development and environmental resource protection. The local people are considered the center for developing green tourism and sustainable development.
Agricultural, rural tourism provides opportunities for “take-off”

Agricultural, rural tourism provides opportunities for “take-off”

(VEN) - In Vietnam’s tourism development strategy, ecotourism associated with agriculture and rural areas is one of the five key products.
Air tickets from HCMC fully booked for Tet holiday

Air tickets from HCMC fully booked for Tet holiday

Flight tickets for many routes from Ho Chi Minh City (HCMC) to northern and central provinces or cities for the upcoming Tet (Lunar New Year) holiday have sold out.
Cheap capital returns to banks

Cheap capital returns to banks

(VEN) - The balance of individuals’ current account savings accounts (CASA) in banks reached a record high of more than VND1.19 quadrillion, boosting cheap capital and profitability for banks.
glorious tradition of the vietnam peoples army

Glorious tradition of the Vietnam People's Army

The Vietnam People’s Army (VPA) celebrate its 80th founding anniversary on December 22, 2024, a milestone in the army’s glorious history of serving and defending the nation. After 80 years of construction and development, the VPA has truly proven its revolutionary nature as an army “born from the people, fighting for the people, and serving the people”.
total fdi registered in vietnam hits 314 billion usd in january november

Total FDI registered in Vietnam hits 31.4 billion USD in January-November

As of November 30, 2024, the total newly registered capital, adjusted capital, and capital contributions or share purchases by foreign investors in Vietnam reached nearly 31.4 billion USD, up 1% increase compared to the same period last year.
first 11 months of 2024 import export turnover increases 154

First 11 months of 2024: Import-export turnover increases 15.4%

In the first 11 months of this year, Vietnam’s total import-export turnover reached 715.55 billion USD, up 15.4% against the same period last year, of which exports rose by 14.4% and imports up 16.4%. In the reviewed period, Vietnam enjoyed a trade surplus of 24.31 billion USD.
11 month agro forestry fishery exports exceed yearly target

11-month agro-forestry-fishery exports exceed yearly target

Vietnam’s total export turnover of agro-forestry-fishery products in the first 11 months of 2024 reached 56.74 billion USD, an increase of 19% over the same period in 2023. The sector has exceeded the set target of 54-55 billion USD for the whole year, and is confidently aiming for a new record of 60 billion USD.
hanoi achieves or exceeds 2324 socio economic targets for 2024

Hanoi achieves or exceeds 23/24 socio-economic targets for 2024

Hanoi achieves rather comprehensive results in its socio-economic development in 2024, with 23/24 targets completed or exceeded.
Amended Electricity Law proves MoIT’s institutional improvement success

Amended Electricity Law proves MoIT’s institutional improvement success

(VEN) - The amended Electricity Law has been recently passed by the National Assembly, marking a new milestone deeply influenced by the Ministry of Industry and Trade (MoIT) in enhancing the institutional framework in a “rapid” spirit.
Ministry proposes extending agricultural land tax exemption through 2030

Ministry proposes extending agricultural land tax exemption through 2030

The Ministry of Finance has proposed the National Assembly extend the agricultural land tax exemption until December 31, 2030, a move aimed at encouraging investments in agriculture and rural areas to improve the competitive edge of the agricultural products amidst deeper international integration.
Gov

Gov't targets to gradually make English second language at schools by 2030

The Government has approved a plan for international cooperation in the field of education and training until 2030 in order to improve the quality of workforce for socio-economic development.
Nine newly-adopted laws made public

Nine newly-adopted laws made public

The Presidential Office on December 20 announced the President’s order to make public nine new laws that were passed by the 15th National Assembly at its eighth session.
Industry sector asked to urgently restart Ninh Thuan nuclear power project

Industry sector asked to urgently restart Ninh Thuan nuclear power project

The industry and trade sector should exert efforts to speed up the implementation of the revised Electricity Law and the policy on restarting the Ninh Thuan nuclear power project in the south-central province of the same name, Deputy Prime Minister Bui Thanh Son has said.
Success story behind 500kV Circuit-3 transmission line project

Success story behind 500kV Circuit-3 transmission line project

(VEN) - After over-seven-month construction, the 500kV Circuit-3 Quang Trach - Pho Noi power transmission line project, with its enormous workload, was completed on schedule, marking a milestone of the Vietnamese electricity sector in 2024.
Ministry proposes incentives for renewable energy projects

Ministry proposes incentives for renewable energy projects

The Ministry of Industry and Trade has proposed incentives to attract investments in renewable energy projects in a draft decree on implementing the Law on Electricity, which has recently been made public for comments.
The Era of Advancement for Vietnam Industrial Park

The Era of Advancement for Vietnam Industrial Park

(VEN) - The Vietnam Industrial Park Forum 2024, themed “The Era of Advancement for Vietnam Industrial Park”, is officially held in Ho Chi Minh City.
Vietnam increasingly attractive to foreign investors

Vietnam increasingly attractive to foreign investors

(VEN) - Many economists and international organizations forecast Vietnam can attract US$39-40 billion of foreign direct investment (FDI) in 2024, comparable to the result achieved in 2023, over US$39 billion.
Nghe An Southeast Economic Zone aims to attract 1 billion USD in FDI in 2025

Nghe An Southeast Economic Zone aims to attract 1 billion USD in FDI in 2025

The Southeast Economic Zone of Nghe An Province targets attracting around 1 billion USD in foreign direct investment (FDI) in 2025, heard at a conference held by the Nghe An Southeast Economic Zone Management Board in Vinh City on December 20.
Boeing aims to expand investment and cooperation in Vietnam’s defense sector

Boeing aims to expand investment and cooperation in Vietnam’s defense sector

Mr. Dale McDowall, Executive Leader, Defense and Aerospace, Singapore and Southeast Asia at Boeing's Defense, Space & Security, announced that Boeing aims to invest in Vietnam and expand cooperation in the defense sector.
Can Tho attracts non-state investment

Can Tho attracts non-state investment

Can Tho has been planned as a nuclear urban centre of the Mekong Delta region and received central government attention after the National Assembly issued a resolution on piloting special mechanisms for Can Tho’s development.
Banking sector: Capital flows with no congestion

Banking sector: Capital flows with no congestion

(VEN) - So far, despite the difficulties in capital sources, the Vietnamese banking sector continued to maintain stability. Capital injection into the economy has been more favorable, with no congestion like in previous years. That is a great achievement of the sector in 2024.
Cashless payment requires biometric data updating from January 1, 2025

Cashless payment requires biometric data updating from January 1, 2025

From January 1, 2025, customers will not be able to perform any digital transactions on mobile if they have not completed the biometric information update.
Year-end surge in property bond issuance amid financial challenges

Year-end surge in property bond issuance amid financial challenges

As 2024 draws to a close, Vietnam's real estate industry is witnessing a notable surge in corporate bond issuances.
Vietcombank named most valuable brand in Vietnam

Vietcombank named most valuable brand in Vietnam

The Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) has become the most valuable brand in Vietnam in 2024, according to a recently released report of Forbes Vietnam.
Sowing millions of seeds to green Vietnam’s shared home

Sowing millions of seeds to green Vietnam’s shared home

Each year in Vietnam, millions of seeds are persistently sown to increase forest coverage, contributing to watershed protection, safeguarding mangrove ecosystems, and mitigating the impacts of climate change.
Dong Thap revives red-crowned crane population

Dong Thap revives red-crowned crane population

In a bid to save its iconic symbol, the Mekong Delta province of Dong Thap is embarking on a conservation and development scheme for the critically endangered red-crowned cranes at the Tram Chim National Park for the 2022–2032 period.
Vietnam likely to face continued turbulent weather systems in 2025

Vietnam likely to face continued turbulent weather systems in 2025

Global temperatures are expected to rise next year, posing a significant risk of extreme and prolonged heat waves in Vietnam, Mai Van Khiem, Director of the National Centre for Hydro-Meteorological Forecasting (NCHMF), has predicted.
Nature-based projects help Mekong Delta fight climate change

Nature-based projects help Mekong Delta fight climate change

Nature-based projects implemented by the World Wildlife Fund (WWF) Vietnam in the Mekong Delta region have helped support local residents to adapt to climate change, heard at a workshop which is part of The Mekong Connect Forum 2024 held in Mekong Delta province of An Giang on December 17.
Innovative startup ecosystem witnesses strong development

Innovative startup ecosystem witnesses strong development

(VEN) - Vietnam is emerging as one of the dynamic emerging economies and a hub for innovative startups in the Asia-Pacific region thanks to a strong development of its innovative business ecosystem.
Top 10 science and technology highlights in Vietnam in 2024 announced

Top 10 science and technology highlights in Vietnam in 2024 announced

The Vietnam Science and Technology Journalists Club announced the 10 most significant science and technology events of the year on December 23, 2024. This marks the 19th year the club has organised the selection.
Contracts worth 286.3 million USD inked at Vietnam Int’l Defence Expo 2024

Contracts worth 286.3 million USD inked at Vietnam Int’l Defence Expo 2024

Sixteen contracts worth 286.3 million USD in total, and 17 cooperation agreements between Vietnam’s defence industry units and businesses from various countries such as the US, India, France and Belgium were signed at the Vietnam International Defence Expo 2024 held in Hanoi from December 19-22.
Vietnam can partner with UK in developing nuclear power: Expert

Vietnam can partner with UK in developing nuclear power: Expert

Vietnam should research the feasibility of applying small modular nuclear reactor technology that the UK is currently working on, according to Dr. Dao Duc Cuong from the mechanical, engineering and energy faculty of the University of Bradford of the UK.
Air tickets from HCMC fully booked for Tet holiday

Air tickets from HCMC fully booked for Tet holiday

Flight tickets for many routes from Ho Chi Minh City (HCMC) to northern and central provinces or cities for the upcoming Tet (Lunar New Year) holiday have sold out.
Bac Ninh Province focuses on year-end market stabilization

Bac Ninh Province focuses on year-end market stabilization

(VEN) - One of the key tasks of Bac Ninh Province at this time is to focus on stabilizing the market towards year’s end and during the 2025 Lunar New Year holiday.
Vietnam aims to reduce greenhouse gas emissions in agriculture production

Vietnam aims to reduce greenhouse gas emissions in agriculture production

The transformation of agricultural production towards ecological, organic, circular and low-emission agriculture is a top priority as Vietnam seeks to meet its goal of achieving net-zero emissions by 2050, experts said.
Metro Line 1 serves 150,000 passengers on opening day

Metro Line 1 serves 150,000 passengers on opening day

The Metro Line 1 (Ben Thanh–Suoi Tien) in Ho Chi Minh City witnessed a remarkable turnout of approximately 150,000 passengers on its first day of operation on December 22.
PV GAS sets many records, exceeds 2024 production, business plan

PV GAS sets many records, exceeds 2024 production, business plan

(VEN) - With the motto of action “Adding new motivation, renewing old motivation,” along with the proactiveness, determination, and breakthrough in transforming the business model, PV GAS is estimated to comprehensively complete and exceed the production and business targets for 2024, setting many records and historical milestones.
“PV GAS - Green Energy Journey” marathon: Act for health, act for the environment

“PV GAS - Green Energy Journey” marathon: Act for health, act for the environment

(VEN) - On December 22, the “PV GAS - Green Energy Journey” marathon was officially kicked off in Hanoi by the Petrovietnam Gas Joint Stock Corporation (PV GAS). This event marks the beginning of a series of vibrant social and sports activities in both Hanoi and Ho Chi Minh City, celebrating PV GAS’s successful 2024 – a year in which it shone as an energy spotlight in Vietnam. PV GAS has continuously achieved remarkable milestones, expanding its footprint to ensure comprehensive, flexible nationwide supply of clean gas.
PV GAS reviews maintenance and repair of gas facilities in 2024

PV GAS reviews maintenance and repair of gas facilities in 2024

(VEN) - On December 13, 2024, in Vung Tau City, the Petrovietnam Gas Corporation (PV GAS) organized a workshop on the maintenance and repair of gas facilities in 2024.
Vietnamese products make waves at Malaysia’s halal festival

Vietnamese products make waves at Malaysia’s halal festival

Vietnam recently showcased its certified halal products at the Melaka Halal Festival 2024 in Malaysia, a move to expand its presence in the global halal market.
tcty-dau-khi-vn-pv-power-2022
“City Tet Fest - Thu Duc 2025” New Year Festival to be held soon

“City Tet Fest - Thu Duc 2025” New Year Festival to be held soon

(VEN) - The New Year Festival “City Tet Fest - Thu Duc 2025” will take place from December 28, 2024 to January 1, 2025 at Saigon Riverside Park, Ho Chi Minh City.
“Xen Dong” ceremony of Thai ethnic people recognised as national intangible cultural heritage

“Xen Dong” ceremony of Thai ethnic people recognised as national intangible cultural heritage

On the evening of December 21, at Golden Field Square, Nghia Lo Town, Yen Bai Province, a ceremony was held to announce the decision and award the Certificate of National Intangible Cultural Heritage for the “Xen Dong” (Forest Worship) Ceremony of the Thai People in Nghia Lo Town.
Fireworks to light up sky over Hanoi on New Year celebration

Fireworks to light up sky over Hanoi on New Year celebration

The capital city of Hanoi is set to welcome the New Year 2025 with spectacular firework displays at five locations and 30 venues for the Lunar New Year (Tet) Festival.
Vietnam’s high-end fashion targets Chinese market

Vietnam’s high-end fashion targets Chinese market

An increasing number of Chinese celebrities are choosing high-end Vietnamese fashion, creating new opportunities for Vietnamese designers to make their mark in the 1.4 billion-strong market.
Ninh Binh promotes green tourism development

Ninh Binh promotes green tourism development

(VEN) - Like the central province of Quang Nam, the northern Ninh Binh Province is considered a model for ensuring harmony between tourism development and environmental resource protection. The local people are considered the center for developing green tourism and sustainable development.
Agricultural, rural tourism provides opportunities for “take-off”

Agricultural, rural tourism provides opportunities for “take-off”

(VEN) - In Vietnam’s tourism development strategy, ecotourism associated with agriculture and rural areas is one of the five key products.
Son La rural tourism promoted

Son La rural tourism promoted

(VEN) - In order to develop rural tourism as part of the New-style rural area construction program in the 2021-2025 period, the northern province of Son La aims to have over 50 percent of rural tourism establishments meeting standards to serve tourists by 2025.
Vietnam aims to welcome 22-23 million international visitors in 2025

Vietnam aims to welcome 22-23 million international visitors in 2025

The tourism industry of Vietnam has planned to receive 22-23 million international visitors by 2025 as part of its efforts to recover and grow the tourism industry following the impact of the COVID-19 pandemic.
Mobile Version