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In brief

The General Department of Taxation (GDT) has released the draft circular implementing the 2019 Law on Tax Administration and Decree No. 126/2020/ND-CP guiding some provisions of the Law on Tax Administration (“Draft Circular“), and is now accepting public comments. Comments must be submitted to the GDT by 15 March 2021. In addition to the detailed guidance on the tax compliance procedure, tax refund, the tax audit process and other tax administration related subjects, the Draft Circular includes noteworthy definitions of activities and business entities who will fall under the scope of the regulations on registration, declaration, and payment of tax in relation to e-commerce activities and digital-based businesses.

Key takeaways


Article 3 of the Draft Circular defines “e-commerce activities” and “digital-based business” broadly, as follows:

  • “E-commerce activities” is the conduct of part or the entire process of commercial activities 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.

Entities responsible for tax registration, declaration and payment

Article 84 of the Draft Circular identifies the entities responsible for tax registration, tax declaration and tax payment for e-commerce business activities and digital-based business, as follows:

  • overseas suppliers that do not have a fixed place of business in Vietnam and conduct e-commerce or digital-based business with organizations and individuals in Vietnam (hereinafter referred to as overseas suppliers) that are considered to have a permanent establishment in Vietnam
  • Vietnamese organizations that purchase goods and services from overseas suppliers
  • commercial banks and intermediary payment service providers (IPSP)

In more detail

  • Tax registration, declaration and payment will be conducted through an electronic portal run by the GDT. If the system is activated after the circular has gone into force, then overseas suppliers will conduct the registration and start declaring tax only after the GDT system is activated. However, tax is incurred from the effective date of the circular, and no interest is charged for the period running from the effective date of the circular until the tax declaration.
  • Tax will include VAT and CIT, which are calculated at the deemed rates as provided under current Circular No. 103/2014/TT-BTC regarding foreign contractor tax on revenues derived in Vietnam.
  • Overseas suppliers will pay tax directly on a quarterly basis, while banks and IPSPs will withhold and pay tax on a monthly basis.
  • Determination of revenue derived in Vietnam for tax assessment purposes will be based on payment information (credit card or bank account information), residency information (i.e., billing, delivery or home address) and access information (e.g., mobile phone country code, IP address, and landline address).
  • Some points regarding the permanent establishment exposure of overseas suppliers, implication on non-registration, tax treaty protection claiming procedure, etc. remain unclear. As such, please feel free to reach out to our contacts before 10 March 2021 should you have any comments/suggested revisions.

Thanh Vinh Nguyen is a partner in Baker McKenzie's Ho Chi Minh City office. Prior to joining the Firm, he practiced tax and consultancy work for two international accounting firms and worked as a compliance counsel for an international insurance company. He has co-written Business Operations in Vietnam, published by The Bureau of National Affairs, Inc.


Thanh Hoa Dao is a special counsel in Baker McKenzie's Ho Chi Minh office. Prior to joining Baker and McKenzie, she worked as legal counsel at one of the Big Four firms.