Starting July 1st, e-commerce platforms and digital platforms are required to withhold and remit value-added tax (VAT) and personal income tax (PIT) on behalf of individual and household businesses selling on their platforms, according to Decree 117. This applies to both domestic and international sellers.

Taxes will be deducted upon successful order confirmation and payment. The tax amount is a percentage of each completed transaction's revenue.

For example, VAT rates are 1% for certain goods, 5% for services, and 3% for transport and goods-related services. PIT rates for domestic sellers are 0.5% on goods, 2% on services, and 1.5% on transport and goods-related services. International sellers face PIT rates of 1% on goods, 5% on services, and 2% on transport and goods-related services.

Screenshots of e-commerce platform applications. Photo: Vien Thong

A representative from the Tax Department, citing Circular 40/2021, explained that the tax is calculated as a percentage of total revenue. This means VAT and PIT are based on the total revenue from goods, services, and other income sources. Expenses like transaction fees, shipping, discounts, and subsidies are not deductible.

For instance, a Shopee seller with a reported monthly revenue of 259 million VND, but a net income of 196 million VND after deductions, would pay 1.5% tax on the 259 million VND, not the 196 million VND.

Sellers who have had taxes withheld but whose annual revenue is below 100 million VND (200 million VND from 1/1/2026) can apply for a refund.

For online sales not conducted through platforms, sellers must declare and pay taxes via the electronic portal for household and individual businesses engaged in e-commerce.

In addition to VAT and PIT, online sellers must also declare and pay annual license tax, special consumption tax, environmental protection and natural resources tax, and other applicable taxes. They are also responsible for providing accurate tax identification numbers, personal identification numbers, or passport information to the platforms.

Invoicing for household and individual businesses follows Decree 70 and Circular 32. According to tax authorities, those selling directly to consumers should use electronic invoices generated from cash registers (as per Decree 70), while those not selling directly to consumers should use electronic invoices with tax authority codes.

If sellers authorize the platform to issue invoices, the platform is responsible for doing so.

Sellers issue invoices to customers but do not declare or pay taxes on the revenue or taxes already withheld and remitted by the platform. If authorized by the seller, the e-commerce platform handles invoicing.

According to Nguyen Quynh Duong, CEO of multi-channel sales management software Nhanh.vn, invoices should be issued when ownership or usage rights are transferred to the buyer, regardless of payment status. For online orders, the ideal time is upon delivery, based on the order status updated by the shipping company or platform.

Online sellers frequently encounter returns and cancellations. Two scenarios exist for invoicing in these cases.

First, if the customer refuses delivery upon arrival, marked as "Returned" by the shipper or platform, no invoice is needed.

Second, if the customer returns the goods after receiving them (order status "Successful"), the seller creates a return slip. Many invoicing software systems then generate a credit note referencing the original invoice, listing the returned items and their details, allowing for accurate revenue adjustments.

Duong added that electronic invoices from cash registers do not require buyer information unless requested.

As e-commerce platforms often hide buyer information, making identification difficult for sellers, Duong suggests recording buyer names as "Platform Buyer + Order ID" for easier tracking and reporting to tax authorities.

In the first 5 months of the year, online businesses paid 74,400 billion VND in taxes, a 55% increase year-on-year, according to the Tax Department (Ministry of Finance).

Deputy Director of the Tax Department, Dang Ngoc Minh, stated that Decree 117 ensures online businesses fulfill their tax obligations like other businesses. The regulations also increase the responsibility of platform operators in tax management, reducing administrative burdens for taxpayers, promoting a fair business environment, and preventing tax evasion in e-commerce.

Minh urged regional tax authorities to increase awareness and support for platform operators and online businesses in complying with tax regulations. The tax sector will continue its digital transformation, using technology to build a modern, transparent, and sustainable national financial system.

Phuong Dung