Which agency is responsible for tax deduction when an overseas supplier does not apply for taxpayer registration in Vietnam?

Which agency is responsible for tax deduction when an overseas supplier does not apply for taxpayer registration in Vietnam?

Based on Clause 2, Article 81 of Circular 80/2021/TT-BTC, the following is stipulated:

Responsibilities of relevant organizations and individualsư in Vietnam when buying goods and services from overseas suppliers

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2. In cases where an individual purchases goods or services from an overseas supplier, and the supplier does not apply for taxpayer registration, tax declaration, or tax payment in Vietnam as prescribed in Articles 76, 77, 78, and 79 of this Circular, then commercial banks and organizations providing intermediary payment services have the responsibility to withhold and pay on behalf of the supplier as stipulated at Point a, Clause 3, Article 30 of Decree 126/2020/ND-CP.

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Additionally, Point a, Clause 3, Article 30 of Decree 126/2020/ND-CP regulates the Duties and Powers of Commercial Banks and Organizations Providing Intermediary Payment Services as follows:

Duties and Powers of Commercial Banks and Organizations Providing Intermediary Payment Services

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3. To withhold and pay on behalf of the tax obligations of overseas suppliers without permanent establishments in Vietnam who engage in e-commerce, digital platform-based business with organizations and individuals in Vietnam (hereinafter referred to as overseas suppliers) as stipulated in Clause 3, Article 27 of the Law on Tax Administration as follows:

a) For an overseas supplier who has not performed registration, declaration, or tax payment, commercial banks, and organizations providing intermediary payment services will withhold and pay tax obligations according to the legal provisions on tax for each product, good, or service that an individual in Vietnam pays to the overseas supplier related to e-commerce business activities, digital platform-based business.

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From the above two provisions, it can be observed that in cases where an overseas supplier has not completed registration, declaration, or tax payment in Vietnam, commercial banks and organizations providing intermediary payment services have the responsibility to withhold and pay on behalf of the tax obligations for each product, good, or service that an individual in Vietnam pays to the overseas supplier related to e-commerce business activities, digital platform-based business.

Which agency is responsible for tax deduction when an overseas supplier does not apply for taxpayer registration in Vietnam? (Image from Internet)

How shall an overseas supplier declare and calculate tax directly in Vietnam?

Pursuant to Article 77 of Circular 80/2021/TT-BTC, the declaration and direct calculation of tax by overseas suppliers in Vietnam are stipulated as follows:

- overseas suppliers must declare tax directly at the electronic portal of the General Department of Taxation, using the electronic transaction authentication code provided by the tax authority through the General Department of Taxation's electronic portal and send electronic tax declaration dossiers to the managing tax authority, as follows:

+ Tax declaration for overseas suppliers is a type of tax declared and paid quarterly.

+ Electronic tax declaration form number 02/NCCNN is issued with Appendix I of Circular 80/2021/TT-BTC.

+ overseas suppliers pay value-added tax and corporate income tax based on the percentage calculated on revenue.

+ The revenue subject to value-added tax is the revenue received by the overseas supplier.

+ The revenue subject to corporate income tax is the revenue received by the overseas supplier.

+ The percentage used to calculate value-added tax on revenue is prescribed in Point b, Clause 2, Article 8 of Decree 209/2013/ND-CP.

+ The percentage used to calculate corporate income tax on revenue is prescribed in Clause 3, Article 11 of Decree No. 218/2013/ND-CP.

- In cases where, after completing the procedures for tax declaration and payment, the overseas supplier discovers errors, they must make a declaration to adjust the payable tax amount arising in Vietnam using form number 02/NCCNN issued with Appendix I of Circular 80/2021/TT-BTC.

- overseas suppliers use the electronic transaction authentication code provided directly by the managing tax authority to authenticate when declaring or adjusting.

- After the overseas supplier declares tax and makes any necessary adjustments (if any), the managing tax authority assigns and notifies the overseas supplier of the code for the state budget payment, which serves as the basis for the overseas supplier to pay tax.

- overseas suppliers are responsible for storing the information used to identify transactions of organizations and individuals purchasing goods originating in Vietnam to facilitate inspection and audit by the tax authority.

- In cases where the overseas supplier is located in a country or territory that has signed a tax agreement with Vietnam, procedures for tax exemption or reduction shall be implemented according to the agreement to avoid double taxation as stipulated in Article 62 of Circular 80/2021/TT-BTC.

Download form number 02/NCCNN issued with Appendix I of Circular 80/2021/TT-BTC

How does an overseas supplier register for e-tax transactions in Vietnam?

According to Article 74 of Circular 80/2021/TT-BTC, the registration for e-tax transactions by overseas suppliers is regulated as follows:

- overseas suppliers carry out electronic tax transaction registration along with the initial taxpayer registration through the electronic portal of the General Department of Taxation, ensuring the following conditions are met: Ability to access and use the Internet; possession of an email address to transact with the direct managing tax authority.

- overseas suppliers must register one official email address to receive all notifications during the process of electronic transactions with the direct managing tax authority.

- After successfully completing the initial taxpayer registration, the General Department of Taxation's electronic portal sends information regarding the electronic transaction account and tax code to the registered email address of the taxpayer to perform tax procedures on the General Department of Taxation's electronic portal.