The E-commerce Platform to Take Care of Your Tax Obligations: A Seamless Solution for Online Sellers

The government has issued Decree No. 117 on tax management for e-commerce and digital platform businesses operated by households and individuals, effective from July 1st. According to the decree, e-commerce platforms and digital platforms must withhold and pay value-added tax (VAT) and personal income tax on behalf of the sellers (households and individual businesses) on the platform. The sellers include resident and non-resident individuals in the country.

These taxes will be withheld as soon as the order is successfully confirmed and the buyer accepts the payment. The tax amount is determined by a percentage of the revenue from each completed transaction. For example, VAT for goods with a 1% rate, services at 5%, and transportation and services attached to goods at 3%.

As for personal income tax, resident individuals in the country are subject to a tax rate of 0.5% for goods, 2% for services, and 1.5% for transportation and services attached to goods. Non-resident individuals are subject to a personal income tax rate of 1% for goods sold on online platforms, 5% for services, and 2% for transportation and services attached to goods.

In cases where the online platform management unit cannot determine whether a transaction is for goods or services, the tax withholding rate will be based on the highest applicable rate. Tax declaration for these platforms is done on a monthly basis.

For canceled transactions or returned goods, the e-commerce platform management organization shall offset the tax already withheld and paid on behalf of the canceled or returned transactions with the tax to be withheld and paid on behalf of the transactions for the sale of goods and provision of services.

The tax amount to be paid by the e-commerce platform management organization is determined by the total tax of the transactions for the sale of goods and provision of services after offsetting with the total tax of the canceled or returned transactions of the households and individuals.

The decree stipulates that households and residents engaging in business activities on e-commerce platforms are responsible for declaring and paying special consumption tax, environmental protection tax, resource tax, and other amounts payable to the state budget as regulated by tax laws, tax administration laws, and other relevant legal documents.

Individuals doing business on online sales platforms are also responsible for providing complete and accurate information such as tax codes or personal identification numbers, and passports to the platforms.