Vietnam: Taxation in digital economy | KPMG | GLOBAL

Vietnam: Taxation in digital economy

Vietnam: Taxation in digital economy

With the advent of information and communication technology, businesses have witnessed changes in the way they do business. For direct taxes, three key issues arise from the characteristics of the digital economy—(1) digital presence vs. traditional tax presence; (2) data/value creation; and (3) characterization of income derived from the digital economy.

1000

Related content

While Vietnam has not had a separate regime on taxation of the digital economy, the government has indicated a top agenda item is to study the Organisation for Economic Cooperation and Development (OECD) base erosion and profit shifting (BEPS) actions on the digital economy and develop a set of rules that would address the treatment of income derived from Vietnam by the digital companies. 

While Vietnam may have brought some expanded permanent establishment (PE) concepts into effect under current interpretive guidance on Vietnam’s tax treaties, an official letter from the tax authorities provides that the involvement in the negotiation or performance of contracts by staff of a foreign company’s representative office in Vietnam would constitute a PE in Vietnam.

The tax authorities have confirmed that all kinds of e-commerce (including business-to-consumer and customer-to-customer transactions) will be required to declare and pay tax on their income arising from Vietnam. The government has also indicated an intention to require foreign digital companies to register, declare, and pay tax in Vietnam.

In the meantime, Vietnam is seeking to reinforce its current “foreign contractor tax” regime to protect its taxing right on Vietnam-sourced income derived from certain e-commerce businesses. For instance, an official letter clarified that the foreign contractor tax applied with respect to commission income of foreign digital companies conducting business in online room-booking services in Vietnam.

 

Read a June 2017 report [PDF 2 MB] prepared by the KPMG member firm in Vietnam

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us

 

Request for proposal

 

Submit