Vietnam defers e-commerce tax by five months

Vietnam is set to delay an online tax on e-commerce vendors by five months to support economic recovery amid severe Covid-19 impacts.

The Ministry of Finance has proposed to the government that the implementation of Circular 40 be postponed until January 1, 2022, Minister Ho Duc Phoc said Sunday. The circular was to take effect on August 1.

The delay has been proposed as part of several solutions to support the recovery of businesses as the fourth Covid-19 wave spreads in Vietnam, infecting over 105,000 people, most of them in HCMC, often referred to as the nation’s locomotive.

The circular imposes a 1.5 percent tax on e-commerce vendors with annual revenues of VND100 million ($4,354) or higher.

E-commerce platforms are responsible for collecting this tax from vendors and paying it to the finance ministry.

An average of 3.5 million transactions are made on e-commerce platforms each day in Vietnam, and the transaction value has been increasing steadily, according to official data.

However, e-commerce platforms have proposed that they aren’t made responsible for paying tax on vendors’ behalf as it will create excessive costs and personnel burdens.

Vietnam’s e-commerce market expanded by 18 percent last year to $11.8 billion, the only one in Southeast Asia to record double-digit growth amid the pandemic, according to the Vietnam e-Commerce and Digital Economy Agency.