Mandatory Withholding Tax by e-commerce platforms 1 July 2025
From 1 July, e-commerce platforms operating in Vietnam will be legally required to collect and remit value-added tax (VAT) and personal income tax (PIT) on behalf of individual and household sellers, under Decree No. 117/2025/NĐ-CP. The move is part of a broader effort by the government to tighten tax administration in the digital economy.
The new regulation applies to both domestic and foreign platforms with direct payment capabilities. Taxes must be calculated and withheld at the point of successful transaction and confirmed payment.
Platforms are advised to update their systems and procedures to comply with the new obligations by 1 July.
Vietnamese Withholding Tax rates
- Personal Income Tax (PIT) for domestic sellers:
- Goods: 0.5%
- Services: 2%
- Transport and related services: 1.5%
- PIT for foreign (non-resident) sellers:
- Goods: 1%
- Services: 5%
- Transport and related services: 2%
- VAT withholding rates:
- Goods: 1%
- Services: 5%
- Transport and associated services: 3%
Platforms must declare withheld VAT and PIT on a monthly basis. In the case of canceled or returned transactions, the withheld amount can be adjusted against future tax liabilities.
Vietnam’s VAT Framework
Vietnam implements a 10% standard VAT rate, applicable to most goods and services, under the Law on Value-Added Tax. Certain essential goods and services are subject to a reduced 5% rate, and exports are typically zero-rated. E-commerce platforms engaging in taxable activities in Vietnam are considered liable for VAT, and cross-border sellers may also be required to register for VAT depending on the nature of their transactions.
Decree 117 marks a significant step in Vietnam’s effort to integrate digital commerce into the formal tax system. By shifting the responsibility of tax collection to e-commerce intermediaries, authorities aim to reduce evasion, increase transparency, and ensure equitable tax treatment between traditional and digital sellers.
