HCM City tax department to monitor social media businesses

The Ho Chi Minh City Department of Taxation has said recently that its data center is checking Facebook accounts used for conducting business, with a view to determining any tax obligations.

Not all individual Facebook accounts, however, have to pay tax on their business. Those that are conducting “non-professional” business on an irregular basis and with low turnover will not have to pay tax.

Only those with large sales and unpaid taxes are targeted, according to the head of the city’s tax department.

Upon completing the checks, the department will submit plans to the city’s People’s Committee to coordinate with other departments to collect e-commerce business management taxes, including business Facebook accounts.

At a meeting between city leaders and the department in February, the Department of Industry and Trade proposed collecting taxes from Facebook businesses.

The Department of Tax Policy under the General Department of Taxation (GDT) is also studying the management of taxes on business activities conducted via social networks such as Facebook, YouTube, and Zalo.

According to experts, collecting sales tax from Facebook business is not an easy task. Every organization and individual can now own multiple accounts on social networks for their business.

Sales are mainly made in cash, so it is difficult to monitor. In addition, some people only do business via Facebook as a seasonal job or to earn more income, which also challenges tax management.

The department’s current solution is to require people doing business on social networks to provide information such as their name, address, telephone number, and personal tax code, in order to control their business activities more strictly.

In 2015, revenue from e-commerce in Vietnam reached $4.1 billion, an increase of five-fold compared to 2012, according to the latest data from the GDT. It is expected to reach $10 billion by 2020, accounting for 5 per cent of total retail sales in the country. E-commerce will therefore play a significant role in Vietnam’s retail sector in the future.