The Ministry of Finance of Vietnam has promulgated Circular 80/2021/TT-BTC guiding the implementation of some articles of Law on Tax Administration and Decree 126/2020/ND-CP. In particular, there are specific instructions on tax administration for e-commerce business, business on digital platforms and other services of overseas suppliers without permanent establishments in Vietnam.
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Tax administration for foreign suppliers without a permanent establishment in Vietnam (Artwork)
According to Article 73 of Circular 80/2021/TT-BTC of Vietnam stipulating organizations and individuals involved in tax administration for e-commerce business, business on digital platforms and other services of overseas suppliers without permanent establishments in Vietnam include:
1. Overseas suppliers without permanent establishments in Vietnam carrying out e-commerce, digital platform-based business and provide other services for organizations and individuals in Vietnam (hereinafter referred to as "overseas suppliers")
2. Organizations and individuals in Vietnam buying goods and services from overseas suppliers.
3. Tax agencies, organizations that are operating under Vietnam's law and authorized by overseas suppliers to apply for taxpayer registration, declare and pay tax in Vietnam.
4. Commercial banks, payment service providers, organizations and individuals whose rights and obligations are relevant to e-commerce, digital platform-based business and other services provided by overseas suppliers without permanent establishments in Vietnam.
Regarding registering electronic tax transactions
An overseas supplier shall register for an electronic tax transaction together with the first tax registration through the website of the General Department of Taxation when registering for an electronic transaction, ensuring that the following conditions are met:
- Ability to access and use the Internet;
- Having an email address to deal with the tax authority directly.
Note that overseas suppliers register an official email address to receive all notifications during electronic transactions with the direct tax authorities.
After successfully completing the tax registration procedure for the first time, the website of the General Department of Taxation sends information about the electronic transaction account and tax identification number to the registered taxpayer's email address. to carry out tax procedures on the website of the General Department of Taxation.
Regarding tax identification numbers, tax identification numbers for overseas suppliers directly or via authorization to register, declare and pay tax shall comply with the provisions of Circular 105/2020/TT-BTC of Vietnam.
Direct taxpayer registration by overseas suppliers
* Application for first-time taxpayer registration:
The overseas supplier shall complete and submit Form No. 01/NCCNN in Appendix I hereof on the online portal of General Department of Taxation.
* Application for change of taxpayer registration information
The overseas supplier shall complete and submit Form No. 01-1/NCCNN in Appendix I hereof to the supervisory tax authority on the online portal of General Department of Taxation.
(The overseas supplier shall use the verification code provided by the supervisory tax authority via the online portal of General Department of Taxation for verification during the process of taxpayer registration.)
Direct tax calculation and declaration by overseas suppliers
- Tax declaration for overseas suppliers is a tax declared and paid quarterly.
- Electronic tax declaration form No. 02/NCCNN issued together with Appendix I of Circular 80/2021.
- Overseas suppliers pay value-added tax and corporate income tax according to the ratio method on revenue, in which:
+ Value-added taxable revenue is the revenue received by the overseas supplier.
+ Revenue subject to corporate income tax is the revenue received by the overseas supplier.
- The percentage for calculating value-added tax on turnover is prescribed for each activity as follows:
+ Distribution and supply of goods: 1%;
+ Services, construction excluding raw materials: 5%;
+ Production, transportation, services associated with goods, construction including raw materials: 3%;
+ Other business activities: 2%.
- The percentage for calculating corporate income tax on turnover is as follows:
+ Services: 5%, especially restaurant, hotel, casino management services: 10%; in case of providing services associated with goods, the goods shall be calculated at the rate of 1%; the case where the value of goods cannot be separated from the value of services is 2%;
+ Supply and distribute goods in Vietnam in the form of import and export on the spot or under international trade terms (Incoterms) of 1%;
+ Royalties are 10%;
+ Renting aircraft (including engines and spare parts) and ships is 2%;
+ Renting a drilling rig, machinery, equipment and means of transport (except as prescribed at Point d of this Clause) is 5%;
+ Interest on loan is 5%;
+ Transfer of securities and reinsurance abroad is 0.1%;
+ Derivative financial services is 2%;
+ Construction, transportation and other activities is 2%.
In case, after completing the tax declaration and payment procedures, the overseas supplier discovers that there are errors or omissions, they shall declare and adjust the payable tax amount arising in Vietnam according to Form No. 02/NCCNN issued enclosed with Appendix I of Circular 80/2021 of Vietnam
Bao Ngoc
