Digital Platforms in Vietnam Must React to Tax Challenges Fast

As part of its tax reform strategy through 2030, Vietnam has amended various tax laws, including the value-added tax law, the law on tax administration, and the personal income tax law.

These amendments introduced a new tax withholding obligation for both onshore and offshore e-commerce and digital platforms with payment functions. These platforms must withhold, declare, and remit VAT and personal income tax on sales made by individuals selling on them.

The implementing Decree 117, signed on June 9 and effective from July 1, sets out that total tax rates will vary based on the seller’s residency status, ranging from 1.5% or 2% for sale of goods and 7% or 10% for provision of services.

By introducing this obligation, Vietnam’s tax authorities are clearly determined to require platforms—whether onshore or offshore—to play an active role in tax collection and payment on behalf of individual sellers.

Local and foreign platforms have expressed concern over the abrupt rollout and the significant new compliance burden, including expanded documentation and reporting duties.

Foreign platforms are racing to understand and comply with this change. From our observations, their ability to meet the new withholding obligations lawfully and effectively hinges on one thing: clear, actionable guidance paired with a realistic implementation timeline.

Impact on Stakeholders

Domestic platforms got a warning from an earlier failed attempt by the Ministry of Finance to implement this requirement in 2021 via Circular No. 40/2021/TT-BTC.

However, foreign platforms are still largely unprepared. The 2021 attempt faced strong industry pushback and ultimately was shelved, but the newly amended laws revive the obligation in a more formal and enforceable form.

Rolling out a complex tax withholding obligation so fast strains tax officials and the entire e-commerce and digital platform ecosystem. Platforms are now expected to take on tax declaration responsibilities on behalf of individual sellers, even though this was never part of their core business or legal obligations.

E-commerce and digital platforms now face a series of practical challenges:

Inconsistent effective dates. This new obligation is embedded across three different tax laws—the new VAT Law, the amended law on tax administration, and the amended personal income tax law: Each of these laws kicks in at different times.

The amended law on tax administration (effective from April 1) lays out the duty, but the amended personal income tax law (Jan. 1) and new VAT law (July 1) define platforms as withholding agents and taxpayers, giving them the legal standing to withhold and remit taxes on behalf of individual sellers.

This mismatch in timing leaves both local and foreign platforms uncertain about when to start withholding. The implementing decree states that it will enter into force on July 1, making the first due date for filing and payment Aug. 20, and creating a tight deadline for in-scope platforms.

Delayed official guidance. The government recently released the implementing decree with a tight deadline for the initial filing and payment. While a law’s implementing guidance should be issued in tandem with the law’s effective date, the timeline has already slipped.

Privacy issues with individual seller data. To comply with tax filing obligations, platforms must process individual seller information, including names, identification numbers, and other residency status information.

However, processing such personal data from local and foreign sellers triggers cross-border data transfer issues under Vietnam’s data protection regime, such as a mandatory update of their data processing and overseas transfer impact assessments.

Further, foreign platforms may not yet have equipped themselves to gather such data within a short timeframe, unlike domestic platforms which have been obliged to collect data since 2021.

Procedural and documentation burdens. Despite not having a legal presence in Vietnam, foreign platforms must comply with obligations typically reserved for domestic entities—for instance, issuing withholding tax certificates to resident individuals.

Foreign platforms are now unsure whether they must contract with certified Vietnamese providers of electronic withholding certificates. Decree 117, which provides guidance on the implementation of tax withholding obligations, does not specify how a foreign platform issues electronic tax withholding certificates.

In Vietnam, electronic tax withholding certificates must be issued through certified service providers.

While local platforms can readily engage certified providers to issue such certificates, it remains unclear whether foreign platforms (particularly those without a physical presence in Vietnam) are required to contract with certified providers or may issue the electronic certificates themselves.

Requiring platforms to submit detailed annexes on tax declarations and tax payment also creates more burdens.

Challenging work in a compressed timeline. Many platforms—specifically foreign ones—estimate that they need at least nine to 12 months from the issue of official guidance to develop or adjust systems capable of complying with Vietnam’s new withholding and filing requirements.

This includes collecting information from sellers, classifying corporate and individual sellers, and adjusting current systems and internal processes to align with the new rules. With the first filing date of Aug. 20, platforms will likely face significant challenges in meeting their new obligations.

Ultimately, it is crucial for the government and e-commerce and digital platforms to work collaboratively to ensure the successful implementation of the new tax withholding obligation.

By providing clear guidance and allowing adequate time for preparation, Vietnam can create a balanced approach that supports its fiscal goals while also fostering a thriving digital and e-commerce ecosystem.

This cooperation will benefit all stakeholders and pave the way for a more streamlined and effective tax compliance system.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Trung Kien Nguyen is a tax practitioner with BMVN International.

Alex Do is an IP tech executive with BMVN International.

Thanh Hoa Dao is a tax special counsel with Baker McKenzie Vietnam.

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