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.

Foreign digital service providers should also charge and remit VAT on B2B sales. Should the foreign digital service provider not charge VAT, the VAT-registered taxpayer in Vietnam should withhold the VAT amount and remit it to the tax authority on behalf of the non-resident supplier.

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
• Web-hosting
• Broadcasting
• 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.

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.