Vietnam’s Ministry of Finance wants international service providers like Facebook and Google to process payments made by Vietnamese users via a gateway run by the National Payment Corporation of Vietnam (Napas).
The change is expected to help local tax authorities control revenue made by these services in Vietnam and provide a legal framework for the collection for taxes.
The ministry also wants foreign providers of Internet-related services to open official representative offices in Vietnam and make tax declarations as per Vietnamese law.
In a dispatch sent to the State Bank of Vietnam requesting coordination in implementing the plan, the finance ministry claimed that Google and Facebook were offering online advertising services in Vietnam in two ways.
In the first instance, these and other similar foreign entities do business via local intermediaries in Vietnam, who execute their tax responsibilities on their behalf.
However, the majority of transactions between Vietnamese users and companies like Facebook and Google are made via credit card or digital wallet purchases, which pose a challenge to local tax authorities on the control of revenue that such companies make in Vietnam.
Additionally, local users can find themselves at a disadvantage when legal conflicts arise, as proof of purchase provided by foreign entities may not be recognized or verifiable here.
The ministry therefore suggests that all payments to foreign Internet service providers from Vietnam be made via the Napas gateway to facilitate better tax control.
The companies’ representative offices in Vietnam will also be required to work closely with local authorities in performing their tax responsibilities.
According to the ministry, a similar model of tax control has already been implemented successfully in European countries, India and South Korea.
All relevant bodies must work together to introduce stricter penalties in order to deter any company from deliberately evading tax, the ministry wrote.