|VAT Rate on Digital Services||VAT on Cross-Border Electronically Supplied Services||Digital Reporting Requirements for Foreign Sellers Providing Electronically Supplied Services|
VAT on Cross-Border Digital Services in Vietnam
Since January 1, 2022, foreign digital service providers should register, charge and remit VAT on B2C sales. Should the foreign digital service provider not register for VAT, these B2C transactions should be subject to withholding taxes by the financial intermediary. Commercial banks and payment intermediary service companies should declare, withhold, and remit the withholding to the General Department of Taxation.
When a foreign supplier provides digital services to a business in Vietnam (B2B), they can either choose to register, charge and declare the VAT themselves, or the local business should withhold and declare the VAT under the foreign contractor tax withholding regime.
VAT Rate: 5% VAT applied to the sale of affected digital services
Digital Services in Scope
Taxable digital services in Vietnam include services provided through an e-commerce activity or a digital-based business. The Ministry of Finance Vietnam (MOF) defines these terms in Circular No. 80/2021/TT-BTC (“Circular 80“).
“E-commerce activity is the conduct of part or the entire process of commercial activity by electronic means connected to the internet, mobile telecommunications networks or other open networks.”
“Digital-based business is the provision of services through the internet or an electronic network, and the nature of such provision is basically automated with little to no human intervention and cannot be done without using information technology.”
Examples of digital services:
- Streaming or downloading digital content
- Cloud or SaaS-based services or storage
Determining the Location of the Vietnamese Consumer
The following should be considered when determining whether the consumer is in Vietnam:
- Information used for the identification of the consumer
- The card, bank account, or other means of payment that was used
- Country code of the SIM card and/or IP address used
- Landline location
- Any other relevant information
VAT Registration for Foreign Companies
Foreign digital service providers should apply to register for VAT with the Vietnamese Tax Authority as soon as they start a taxable activity.
- VAT registration threshold for non-resident suppliers of Digital Services: No registration threshold
- Fiscal representatives: Not required
- Applications to commence VAT registrations can be made on the Portal of the General Department of Taxation of Vietnam for Foreign Providers
VAT Returns and payment of taxes
VAT returns for non-residents
Vietnam has a simplified VAT return for non-resident digital service providers.
|VAT Return Name||02/NCCNN|
|Filing Deadline||The last day of the month following the tax period|
|Payment Deadline||Same as the filing deadline|
|Payment Currency||Multiple currencies are accepted (USD, EUR, GBP, ADU, CAD, etc.)|
|Fiscal Representative||Not required|
|Input Tax Recovery||Not allowed|
|Record Storage||Records must be stored for 10 years and in Vietnam|
Digital Reporting Requirements for Cross-Border Digital Services
There should be no digital reporting requirement for foreign digital services providers.
Foreign Intermediaries Withholding VAT
Commercial banks, financial intermediaries, and intermediary payment service providers may be responsible for withholding VAT on behalf of the foreign supplier. This should be the case when the foreign supplier provides digital services to individuals, but does not register in Vietnam.
Income Withholding Tax
Local business withholding obligation
Vietnamese businesses that purchase goods or services from non-established suppliers may be responsible for withholding CIT on behalf of the foreign supplier.
Financial intermediary withholding obligation
Commercial banks, financial intermediaries, and intermediary payment service providers may be responsible for withholding CIT on behalf of the foreign supplier. This should be the case when the foreign supplier provides digital services to individuals, but does not register in Vietnam.