E-COMMERCE PLATFORM OWNERS ARE RESPONSIBLE FOR REMITTING TAXES ON BEHALF OF ONLINE SHOPS

On June 9, 2025, the Government issued Decree 117/2025/NĐ-CP opening a new phase in the management of digital platform taxes, enhance the efficiency of tax management for business activities on e-commerce (EC) platforms and digital platforms. Accordingly, organizations managing EC platforms are required to withhold and remit value-added tax (VAT) and personal income tax (PIT) arising from the sales and service provision activities of households and individuals conducting business on these platforms.

This approach marks a significant shift in tax collection methods—from managing individual small sellers to source control, specifically targeting the concentration of cash flow, data, and payment authority: the digital platforms.

NOTABLE PROVISIONS

1. Identification of Entities Obligated to Withhold and Remit Taxes

The Decree specifies that entities obligated to withhold and remit taxes are organizations managing EC platforms, including:

• Organizations acting as EC platform managers or digital platform managers with payment functions domestically and internationally: These are entities establishing platforms that allow buyers to pay directly via e-wallets, bank cards, integrated payment systems, or cash-on-delivery (COD) methods.

• Other digital economy organizations operating in Vietnam that, on behalf of foreign EC or digital platform providers, pay income to individuals or Vietnamese business households for digital information products or services as stipulated by information technology laws.

The extension of tax obligations to foreign platforms, along with intermediary payment organizations, reflects a comprehensive and flexible approach by regulatory authorities in an era where digital space transcends territorial boundaries.

Additionally, the Decree outlines the filing and tax payment procedures for households and individuals conducting business on EC platforms without payment functions.

2. Principles of Withholding:

• Withhold both VAT and corporate income tax (CIT) for each transaction;

• Timing of withholding: Performed immediately upon successful transaction confirmation and acceptance of payment on the e-commerce platform for households or individuals;

• Withheld tax amount: Determined as a percentage (%) of the revenue from each transaction for the sale of goods or provision of services:

  • Revenue per transaction is the amount from the sale of goods or services that the household or individual receives, collected on their behalf by the e-commerce platform management organization.

  • The percentage rate is determined according to the following table

Type of Transaction	VAT rate (%)	PIT rate (%)
Resident	Non-resident
Goods	1%	0,5%	1%
Service	5%	2%	5%
Transportation, services with goods	3%	1,5%	2%

If the nature of the transaction cannot be determined: The highest tax rate corresponding to each type of tax in the table above will be applied.

3. Method of Declaring and Remitting Withheld Taxes

Platforms must declare and remit withheld taxes on a monthly basis electronically, using:

• Tax Declaration Form 01/CNKD-TMDT

• Detailed Schedule 01-1/BK-CNKD-TMDT

Furthermore, the Decree allows for the offsetting of canceled transactions or returns within the same declaration period, ensuring accurate reflection of actual revenue and tax liabilities while minimizing data discrepancies due to refunds or technical errors in transactions.

4. Tax Documents and Data Storage Obligations

In addition to withholding and remitting taxes, EC platform management organizations are required to:

• Issue tax withholding certificates using Form 01/CTKT-TMĐT for households and individuals;

• Encrypt, store, and secure transaction data according to prescribed standards;

• Provide information upon request by tax authorities for inspection and verification. 

This expanded responsibility highlights the need for comprehensive upgrades—from accounting processes and IT systems to internal control capabilities—of businesses operating EC platforms.

IMPACTS AND PRACTICAL CHALLENGES

The transfer of tax obligations from sellers to platforms brings several positive aspects but also poses numerous challenges:

• Shifting tax management to a “source collection” approach enhances control over revenue from the informal economy, especially as small-scale individual businesses become increasingly common.

• The risk of high tax costs if platforms inaccurately classify transactions, leading to the application of inappropriate tax rates.

• Increased compliance responsibilities, including issuing certificates, storing data, and providing information during audits or inspections—even for small-scale platforms.

• The need to standardize accounting, technology, and contractual processes with sellers to ensure consistency and uniform compliance throughout the operational workflow.

IV. PROPOSED IMPLEMENTATION DIRECTIONS

1. For E-Commerce Platforms:

• Review and upgrade accounting systems, integrating automated tax withholding into payment processes;

• Update contract/cooperation terms with sellers to reflect the new tax obligations;

• Establish procedures for issuing certificates, storing, and retrieving transaction data;

• Conduct regular training for legal, accounting, and IT departments on the provisions of Decree 117/2025/ND-CP.

2. For Households and Individuals Conducting Business on Platforms:

• Register tax identification numbers and provide complete identification details to the platform;

• Monitor withholding certificates to ensure accurate declaration and establish rights to tax refunds (if applicable);

• Avoid misunderstanding that tax withholding eliminates the obligation to file returns.

CONCLUSION

The issuance of Decree 117/2025/NĐ-CP marks a strategic step in digitizing tax management in Vietnam, aiming for a more centralized, transparent, and efficient tax system.

In the context of a rapidly growing digital economy, the proactive efforts of e-commerce platforms and sellers in understanding, complying with, and correctly implementing regulations will not only ensure legal compliance but also enhance reputation, operational control, and long-term compliance cost optimization.

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