The Art of Online Sales: Mastering the Digital Marketplace

At the beginning of 2022, when she started her business on Shopee and TikTok Shop, Ms. H.A. from Ho Chi Minh City paid little attention to her tax obligations. It was only recently, when the e-commerce platforms requested tax information, that she registered her business and filed her taxes. However, she was shocked to find that the tax authorities were demanding unpaid taxes and imposing hefty penalties for her failure to declare and delayed payment.

Shocked by the Tax Penalty

“The tax officer presented evidence that my total sales revenue for 2022 and the first six months of 2024 amounted to 300 million VND. Based on this, the tax authority demanded I pay 4.5 million VND in taxes, 300,000 VND in business fees per year, plus a penalty of over 15 million VND,” Ms. H.A. revealed.

Similarly, Mr. M.P. from Hanoi, who owns a home appliance shop on an e-commerce platform, shared that when he visited the tax office to declare his information, he learned that his sales revenue from May 2023 to the present was nearly 500 million VND, and the tax authorities demanded 13 million VND in back taxes, including personal income tax, penalties for late declaration, and late payment. “I was quite unfamiliar with the tax-related regulations, but the tax officers explained them to me, and I felt relieved to understand that generating income and profits means paying taxes,” Mr. M.P. said.

Meanwhile, Ms. K.T. from Ho Chi Minh City, who recently opened a shop on an e-commerce platform, heard that the tax authorities are monitoring and penalizing online businesses that haven’t paid their taxes. She immediately went to register and file her taxes. At the tax office, she was instructed to pay a business fee of 300,000 VND per year, a lump-sum tax of 1.8 million VND per month, and if her revenue exceeded 120 million VND per month, a tax rate of 1.5% would be applied to the additional amount.

According to reports, many business owners have proactively registered, declared, and paid their taxes recently to avoid being subject to heavy fines for late payment. “Business households with a monthly revenue of 100 million VND or more should proactively declare and pay their taxes to avoid severe penalties, as the tax authorities are strictly enforcing this,” said Ms. B.N., the manager of an online cosmetics shop.

Determined to Apply Coercive Measures

In an interview with Nguoi Lao Dong newspaper, Ms. Tran Thi Cam Hong, Director of VI-FATAX Tax Consulting Services Company, said that many individuals and households running online businesses have contacted her company for advice and guidance on business registration and tax declaration. Most of them had been subject to tax arrears and penalties. Others received notifications from the tax authorities about their e-commerce revenue but were unsure how to declare and pay their taxes.

According to Ms. Hong, even if online sellers do not register their business or declare their taxes, the tax authorities can still trace their revenue from previous years and impose tax arrears and penalties. In such cases, the tax amount is calculated by multiplying the revenue by the highest tax rate specified in the Personal Income Tax Law, which is 35%, plus a penalty of 0.03% per day on the revenue. As a result, the online business owner may end up with no profit or even a loss.

“Anyone engaging in online business should understand the tax regulations and proactively declare and pay their taxes to the state budget. Otherwise, the tax authorities will impose substantial tax arrears and penalties, significantly impacting their business,” Ms. Cam Hong advised.

A leader of a tax branch in Ho Chi Minh City shared that, in the first six months of 2024, the tax sector intensified its scrutiny and updated data on e-commerce, utilizing data from tax authorities and relevant ministries and sectors. At the same time, they urged and supported e-commerce platform owners to provide information about organizations and individuals doing business on their platforms.

They also conducted inspections of e-commerce companies, media and creative content companies on online platforms, and individuals selling goods through “livestream” on social media platforms. As a result, the Ho Chi Minh City Tax Department reviewed 7,134 businesses, households, and individuals engaged in e-commerce, prompting tax declarations and payments totaling 1,298 billion VND. They also handled 1,318 cases of tax arrears and penalties, collecting over 72 billion VND…

Mr. Nguyen Nam Binh, Director of the Ho Chi Minh City Tax Department, added that the department would continue to leverage the “Data Warehouse” application to extract data on organizations and individuals doing business on e-commerce platforms nationwide and assign it to relevant units for tax management measures.

Additionally, the Ho Chi Minh City tax sector will develop a plan to enhance tax management for e-commerce activities, provide support, and urge e-commerce platform owners in the city to furnish complete information about organizations, individuals, and service providers operating on their platforms. “We will also identify e-commerce taxpayers with tax debts and resolutely apply coercive measures as per regulations, including proposing a temporary suspension of exit and entry for online sellers who have not paid their taxes,” Mr. Binh further stated.