FOREIGN CONTRACTOR TAX

FOREIGN CONTRACTOR TAX ON SERVICES VIA E-COMMERCE CHANNELS AND DIGITAL PLATFORMS

1. Definition

a. E-commerce

E-commerce refers to the buying and selling of goods or the provision of services through electronic means, especially the Internet. Transactions such as ordering, payment, delivery, advertising, customer service, etc., are all conducted online.

According to Decree No. 52/2013/ND-CP on E-commerce:

“E-commerce is the conduct of part or the whole of a commercial activity process by electronic means.”

b. Digital Platform

A digital platform is a technology system built to create an online environment where parties (users, providers, organizations, etc.) interact, connect, and exchange information, goods, or services automatically and continuously over the Internet.

According to the Ministry of Information and Communications:

“A digital platform is a software system developed to provide digital services, helping organizations, businesses, and individuals transition from traditional environments to digital ones.”

2. VAT on contractor services provided through e-commerce platforms and digital platforms

According to Clause 3, Article 12 of the VAT Law, services provided by foreign suppliers without a permanent establishment in Vietnam, through e-commerce channels and digital platforms to organizations or individuals in Vietnam, are subject to a 10% VAT rate.

Previously, the standard VAT rate was 5%; however, from July 1, 2025, it increases to 10%.

In addition, Corporate Income Tax (CIT) still applies under current regulations, usually at a rate of 5%, resulting in a total tax rate of up to 15%.

3. Taxpayers and tax declaration responsibilities

a. Foreign suppliers (without a permanent establishment in Vietnam) via e-commerce channels or digital platforms:

Must directly or through an authorized organization register for tax, declare tax, and pay tax in Vietnam.

b. Organizations managing digital platforms/e-commerce platforms with payment functions:

Are responsible for withholding, declaring, and paying VAT on behalf of each transaction upon successful payment confirmation.

c. Business households, individual business owners, or purchasing organizations in Vietnam:

If the platform does not handle payment functions, they are responsible for registering, declaring, and paying tax in accordance with regulations.

4. Comparison before and after July 1, 2025