The Ultimatum for Temu: A Make-or-Break Moment

Tax Filing Deadline for Temu Set for Late January 2025

On October 31st, in a discussion with Tien Phong journalists regarding tax management for several cross-border e-commerce platforms, including Temu and 1688, representatives from the General Department of Taxation provided insights into the regulatory framework. They emphasized that operating an e-commerce platform in Vietnam requires a license and is subject to the oversight of the Ministry of Industry and Trade.

Concerning domestic revenue management, which encompasses taxation on e-commerce activities, the authorities rely on the Law on Tax Administration and Circular No. 80-BTC. Accordingly, e-commerce platform managers are responsible for registration, self-calculation, declaration, and direct tax payment through the General Department of Taxation’s electronic information portal.

According to the General Department of Taxation, they have been operating an electronic information portal for foreign suppliers since 2022. In cases where foreign suppliers are found to have under-declared their revenue, the tax authorities will cross-reference data to determine the accurate revenue figures and request the suppliers to fulfill their obligations. If there are indications of tax evasion or fraud, inspections and audits will be conducted in accordance with regulations.

With regards to Temu, the General Department of Taxation shared that on September 4th, Elementary Innovation Pte. Ltd., the owner and operator of Temu in Vietnam, registered for tax through the dedicated portal for foreign suppliers. They were assigned the tax code 9000001289.

As per regulations, foreign suppliers are required to declare and pay taxes on a quarterly basis. Consequently, Temu will commence filing tax returns from the third quarter of 2024. The deadline for the third-quarter tax declaration is October 31, 2024, covering revenue from the commencement of their business operations in Vietnam.

“It is anticipated that Temu will generate revenue in October and will declare it in the fourth quarter. The deadline for filing taxes for the fourth quarter is January 31, 2025, provided they obtain permission from the state management agency to operate. The General Department of Taxation will closely monitor Temu’s revenue declarations to ensure accurate and complete tax collection in accordance with regulations,” the representative stated.

For foreign suppliers generating revenue in Vietnam but failing to register for taxes, the tax authorities are reviewing and implementing appropriate measures to effectively manage taxation for e-commerce and digital platform businesses.

However, some foreign suppliers are taking advantage of the current concept of having a “permanent establishment” by establishing representative offices in Vietnam. This has led to instances where these entities do not fully comply with their tax obligations through the General Department of Taxation’s electronic information portal.

“The General Department of Taxation has reported to the Government and proposed amendments to Article 42 of the Law on Tax Administration No. 38 to align with the practical situation of foreign suppliers in Vietnam,” the representative added.

Ministry of Industry and Trade Issues Ultimatum to Temu

Mr. Hoang Ninh, Deputy Director of the Department of E-Commerce and Digital Economy under the Ministry of Industry and Trade, shared that following the Minister’s directive, the Department is conducting a comprehensive review of the impact and potential solutions regarding cross-border e-commerce platforms such as Temu, 1688, and Shein. The aim is to ensure these platforms comply with Vietnamese laws and regulations.

The Ministry of Industry and Trade has been in direct communication with the legal teams of these cross-border platforms, which fall under the jurisdiction of Vietnamese law. They have requested these platforms to officially register and adhere to consumer protection standards, transparency in information disclosure, and data security. If they fail to comply, the Ministry will consider stricter measures to safeguard the interests of domestic consumers.

In the international context, these platforms are also facing pressure from other countries regarding legal compliance and product quality. Registering and meeting the requirements in Vietnam is essential to maintain a fair, transparent, and responsible e-commerce environment.

According to the leadership of the Department of E-Commerce and Digital Economy, the deadline for foreign businesses with websites providing e-commerce services in Vietnam to complete their registration with the Ministry of Industry and Trade is stipulated in Decree 85/2021/ND-CP. Specifically, these platforms should promptly submit their applications as soon as they start providing e-commerce services in Vietnam or when they meet the conditions indicating their operation in the country. Examples of such conditions include having a Vietnamese domain name, using the Vietnamese language, or exceeding 100,000 transactions per year from Vietnam.

“If the platforms fail to complete the registration process by the deadline, the Ministry of Industry and Trade may apply stringent management measures. This could involve coordinating with the Ministry of Public Security and the Ministry of Information and Communications to consider blocking access to these platforms from Vietnam, thereby protecting consumer rights and ensuring compliance with national laws,” he emphasized.