Vietnam is failing to effectively tax e-commerce and online services as it struggles to make tech giants set up abroad fulfill their taxation duties.
“Taxing e-commerce and digital platforms is a new and difficult challenge. There is huge loss of tax in this area as servers are placed abroad,” Minister of Finance Ho Duc Phoc told the National Assembly on Wednesday.
E-commerce sellers are based both in Vietnam and other countries, and it is difficult to locate and tax them, he added. Phoc was responding to lawmakers’ concerns about tax avoidance in online business.
Nguyen Thi Le Thuy, a lawmaker from the southern province of Ben Tre, estimated that around 85 percent of tax from digital giants like Facebook and Google are lost annually.
Other lawmakers said that the tax that Vietnam has been able to collect from these tech firms recently is not appropriate to their revenues in the country.
Cross-border platforms like Facebook and Google have paid VND5.1 trillion ($220 million) in taxes for the period between 2018 and 2021, according to the finance ministry.
Phoc said that his ministry has set up payment portal and explained to e-commerce platforms and tech giants their tax duties, but taxing them remains a difficult task.
The ministry is considering the best method to tax e-commerce trade, and the long-term goal is to establish an online automatic taxing system.
Vietnam has over 100 e-commerce platforms, including 41 that sell goods and 98 providing services.