Vietnam’s taxman has said it would seek help from Facebook to stop businesses that sell products via its pages without paying tax, despite resistance from online shop owners.

The announcement came in a letter recently sent out by the General Department of Taxation to its subsidiary tax departments, providing guidelines on how to handle Facebook shop owners who deliberately evade paying business income tax.

The letter is a response to a lack of cooperation by the online business community in Vietnam, who mostly ignored an invitation to meet with tax authorities and discuss new regulations regarding their tax responsibilities.

An unworkable plan

Dung, one Ho Chi Minh City resident who has been running a Facebook business selling cosmetics for several years, said he was surprised to learn that Vietnamese tax authorities were looking to stamp out so-called tax-evading Facebook pages.

“I don’t think the plan is properly workable, given that some businesses on Facebook are conducted inside closed groups rather than in public,” Dung explained.

He added that Facebook was simply a platform for shop owners to advertise their products rather than the location where actual transactions took place, and therefore it would be challenging for tax authorities to take any legal actions based on what is displayed publicly on the social media site.

“I post photos of my products on Facebook, but customers who are interested make purchases outside of that platform,” Dung said. “On what grounds therefore do tax authorities claim that I make more than VND100 million [US$4,400] a year?”

“Will the Vietnamese authorities be able to block my page if I don’t use an Internet service based in Vietnam?” asked Nguyen, who lives in China but often uses Facebook to advertise her business supplying Chinese-made clothes to bulk stores in Vietnam.

According to an official from the General Department of Taxation, the authorities have already been working with Internet service providers as well as Facebook’s representative office in Vietnam to discuss measures they can taken against tax-evading online shops.

They have all agreed to help the Vietnamese tax authorities block any offending pages, the official claimed, as they are operating within Vietnam’s territory and therefore must comply with the policies of the local government.

Commenting on the possibility that owners of blocked Facebook shops would simply create new pages for their business activity, he said in those cases businesses would have to build up traffic to their new pages all over again, which he suggested was not a wise thing to do from a marketing perspective.

He added, however, that blocking pages would only be used “reluctantly” and as a last resort by the tax authorities.

Two Vietnamese women shop online via a Facebook page. Photo: Tuoi Tre

Clenched fist

The overwhelming majority of nearly 13,500 Facebook users who run online shops in Ho Chi Minh City, and who received the invitation to meet with tax authorities, refused to show up at their appointed timeslot.

Only 20 online businesses in Binh Thanh District complied, 11 of which were exempt from tax as they made less than VND100 million ($4,400) a year in revenue.

The nine remaining businesses were only made to pay “minimal” tax, according to the Binh Thanh District taxation branch.

Last Saturday, the municipal tax department announced a plan to name and shame owners of Facebook shops that continue to intentionally evade their tax responsibilities.

Over 13,400 owners of Facebook shops in Hanoi have also been asked to register and declare tax for their online businesses, with 1,950 so far complying, according to Vien Viet Hung, deputy director of the Hanoi Department of Taxation.

Hung is advising operators of online businesses to cooperate with tax authorities and comply with their tax responsibilities in order to avoid the risk of legal action in the future.

A senior official of another taxation branch in downtown Ho Chi Minh City said that taxation officials would be investigating the way online shops work, possibly by posing as shoppers.

Based on the results of these measures in Hanoi and Ho Chi Minh City, the General Department of Taxation said it would soon roll out guidelines for the remaining cities and provinces of Vietnam to take action.

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