Ministry of Finance launches new non-resident VAT portal
The Ministry of Finance launched in March 2022 a new English-language online tax portal for foreign providers of digital services to Vietnamese consumers. The ‘General Department of Taxation of Vietnam for Foreign Providers’ portal will enable foreign providers liable to local Value Added Tax obligations to apply for a simplified VAT registration, reporting and payments process.
Non-residents are also permitted to have agents represent them through the portal. If income taxes are also applied on the goods traded by the sellers or marketplaces (liable to tax since Jan 2022), they may also report these.
Voluntary VAT registrations for non-resident; otherwise withholding VAT by payment providers
Vietnam made digital / electronic services and goods provided to its consumers by non-resident (‘overseas suppliers’) providers subject to 10% Value Added Tax from the end of 2020. The Ministry of Finance then confirmed VAT registration processes and obligations in September 2021 from 1 January 2022 in Circular 80/2021/TT-BTC. The details below are based on this guidance. The Circular covered digital services and e-commerce. NOTE: tax registration for non-residents is only optional – not mandatory.
Where a provider is not VAT registered, it will be liable to a Withholding VAT of 5% when paid via payment providers such as credit cards or online payment providers.
Check our global VAT and GST on digital services tracker to see which other countries have introduced indirect taxes on electronic services to consumers.
What digital services are liable to Vietnam VAT?
The following e-services have been made subject to VAT:
- download or streaming video, music etc;
- online gambling and games of chance;
- e-books and online journals;
- e-learning without manual intervention;
- Cloud or SaaS based services and storage; and
- Online gaming.
Online platforms liable January 2022
The tax net was extend to online marketplace as facilitators for third-party merchants. They are now required to VAT register in Vietnam and report and remit taxes. Further details of the rules were provided in June 2021 for introduction on 1 August 2021. This clarified who should now VAT register with the General Department of Taxation (GDT):
- overseas suppliers with no fixed place of business in Vietnam but who conduct e-commerce activities or digital-based business in Vietnam;
- Vietnamese buyers from such overseas suppliers;
- tax organizations and agents operating in Vietnam that are authorized by overseas suppliers to perform the abovementioned tasks; and
- commercial banks, intermediary payment service providers (IPSPs) and other entities with rights and obligations related to the e-commerce activities or digital-based business.
Identifying whether Vietnamese VAT due
As with most countries, the provider must track if their consumer is based in Vietnam and therefore subject to VAT. This may be based on evidence such as:
- IP address used;
- Billing address;
- payment transaction information provided by commercial banks and IPSPs; and
- tax residence status.
Withholding VAT on B2C transactions
The tax office, General Department of Taxation (GDT), publishes a list of VAT registered non-resident providers of digital services and marketplaces. Payment providers must monitor this list to identify which payments will be liable to a Withholding VAT. The GDT will notify head offices of all commercial banks or payment intermediaries of the names and website addresses of non-registered Overseas Suppliers. Head offices of commercial banks or payment intermediaries should inform and instruct their respective branches to withhold taxes from the relevant B2C transactions. For card payments or other forms of payment where commercial banks or payment intermediaries cannot withhold the applicable taxes on behalf of non-registered Overseas Suppliers, the commercial banks and payment intermediaries shall be responsible for monitoring the amounts transferred to non-registered Overseas Suppliers and reporting to the GDT by the 10th date of each month, using a prescrised form.
Asia Pacific VAT on digital services
|Comments (click for details)||Rate||Date||Threshold||Comments|
|Australia||10%||Jul 2017||AUD $75,000|
|Armenia||20%||Jan 2022||AMD 115million|
|Bangladesh||5% - 15%||Jul 2019||–||B2B and B2C|
|Bhutan||7%||Jul 2021||Nu 5million|
|Cambodia||10%||Mar 2022||KHR 250m|
|China||6%-13%||N/a||Nil||Withholding VAT; B2B and B2C|
|Indonesia||11%||Aug 2020||IDR600m or 12k customers|
|Japan||10%||Oct 2015||JPY 10 million|
|Laos||7%||Feb 2022||LAK 400m|
|Nepal||13%||Jul 2022||Rupees 2m||Also 2% DST|
|New Zealand||15%||Oct 2016||NZD 60,000|
|Pakistan||2%||Sep 2021||Nil||Marketplace Withholding VAT|
|Philippines||12%||Jul 2023 ?||P 3million|
|Singapore||7%||Jan 2020||S$ 100,000|
|South Korea||10%||Jul 2015||Nil|
|Taiwan||5%||May 2017||NTD 480,000|
|Thailand||7%||Sep 2021||1.8m Baht|