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VIETNAM: Overseas E-Commerce Businesses Set to Become Income Tax-Liable

Tax is to be payable on all of the country’s digital transactions from 1 July 2020. For the first time, this will see overseas companies in receipt of Vietnam-sourced online payments liable to pay income tax in the country. At present, only domestic e-commerce businesses are obliged to do so.

Although yet to be officially confirmed, it is expected that local contracting parties, as well as any Vietnamese bank and local branches of overseas banks, involved in processing such payments will be made liable for withholding tax on payments due to overseas e-commerce entities. In one possible scenario, an overseas e-commerce trader supplying goods to Vietnam may be required to appoint a Vietnam-resident third party to pay any due tax.

In order to pave the way for the new legislation to be implemented, the Ministry of Industry and Trade, the Ministry of Finance and the State Bank of Vietnam will be monitoring the country’s e-commerce payment traffic. The latter is also said to be working towards the introduction of a national payment gateway for e-commerce transactions.

Content provided by Picture: HKTDC Research
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