Vietnam’s General Department of Taxation is asking for cooperation from commercial banks in monitoring the cash flows of big tech corporations in Vietnam in order to enforce tax responsibilities.

A statement regarding the issue was made by Dang Ngoc Minh, deputy director of the General Department of Taxation, on Tuesday during a press conference to introduce Decree 126/2020, which provides further guidance on the implementation of the 2019 Law on Tax Administration.

According to Minh, the Ministry of Finance is drafting a circular to guide cross-border e-commerce entities through the completion of their tax obligations in Vietnam.

Minh also stated that the taxman is already working with consulting and auditing firms to ensure big tech corporations, namely Google, Netflix, Amazon, and Facebook, are properly addressing their tax liabilities.

Tax implications

Minh clarified that the tax authority will provide affected corporations with guidance on their tax and administrative responsibilities.

Generally speaking, private entities are subject to both business income tax and value-added tax for cross-border services provided to Vietnamese customers.

The General Department of Taxation has called several meetings with representatives of Netflix to assess the fulfillment of the video platform’s tax responsibilities.

According to Minh, the tax agency has plans to probe and recalculate Netflix’s tax filings for its business in Vietnam. It also plans to coordinate a probe with local banks into the firm’s cash flow statements.  

In 2018, the Vietnamese tax body collected around VND800 billion (US$34.6 million) from the cross-border e-commerce activities of big tech firms.

That number increased to VND1 trillion ($43.3 million) in 2019 and once again hit VND1 trillion between January and November this year.

The overall sum of money collected by Vietnam’s tax authority, however, fell short of what authorities say corresponds to the actual amount being shelled out by Vietnamese users for cross-border services.

Tax authorities have thus requested cooperation from local banks in monitoring cash flows from e-commerce services.

Concerns for individual taxpayers

During the media briefing, Minh also addressed uncertainties about whether the new regulation requires banks to provide the names and bank accounts of all taxpayers for tax authorities.

He confirmed that the taxman has no plans to solicit taxpayer information from banks.

In reality, the tax agency only works with banks to administrate the incomes of individuals who benefit from big tech firms’ partnership programs, namely the Facebook Creator Program and the YouTube Partner Program.

Individual identities are only obtained from banks if they are suspected of tax-related misconduct.

“Upon detecting foreign cash flows accruing in the accounts of domestic individuals and entities, the tax body has the authority to require banks to provide transaction details,” Minh stressed.

The official also revealed that the General Department of Taxation will meet with the State Bank of Vietnam to clear up some of the regulations’ murkier details.

As per the current orientation, banks will provide tax authorities with the names and accounts of taxpayers with more than two sources of income, including taxpayers who settle income tax without the aid of their employers.

Other issues, namely data storage and protection, will be discussed and settled between the two state agencies.

The guiding circular for the implementation of this regulation will be published in the near future.

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