May 10, 2019 / 15:06

Vietnam to stop tax evasion by foreign digital advertisers

The Hanoitimes - It`s unfair that foreign giants firms earning a huge amount of money from advertising without paying taxes.

Vietnamese Minister of Information and Communications Nguyen Manh Hung has said that the ministry would soon force foreign firms like Facebook and Google, which earn big in Vietnam by providing advertising, to pay taxes, VnExpress reported.
Vietnamese Minister of Information and Communications Nguyen Manh Hung. Photo: VnExpress
Vietnamese Minister of Information and Communications Nguyen Manh Hung. Photo: VnExpress
A number of foreign service providers in the Vietnamese digital advertising market do not comply with Vietnamese tax laws, Hung said at the National Forum on Developing Vietnam Technology Companies on May 9. 

It’s unfair that foreign firms which earn up to 70% of advertising revenues on digital space paying no taxes whereas Vietnamese peers closely comply with tax obligations, Hung said, adding that this situation should not last longer.

Hung was CEO of military-run telecom Viettel Group – the largest telecommunications conglomerate in Vietnam with 76 million customers and among top 50 global telecom carriers. It consists of 20 subsidiary companies working in more than 10 countries all over the world. The group fetched VND234 trillion (US$10.2 billion) of revenues in 2018.
Concerning the tax payment of foreign tech companies working in Vietnam, the Vietnamese government has considered imposing tax on ads posted on Facebook and Google but the issue remains on debate. 

Not only Vietnam but also some other Southeast Asian have failed to collect tax on ad revenues of  Facebook and Google.

Malaysia is the latest country to mull a draft law to tax Google and Facebook advertisements with an aim to combat “fake news” and protect local firms which are facing declining revenue on traditional media outlets, according to Techwireasia.

Meanwhile, the European Union has proposed taxing tech giants between 1% and 5% of revenue based on where users are located, according to a draft Commision document seen by Reuters in 2018.

Techwireasia reported that Facebook and Google currently pay a 5% value-added tax and a 5% corporate income tax on any revenue generated from their operations in Vietnam.

However, the tax is usually paid by the advertisers in Vietnam as  authorities withhold the tax from the sum due to the recipient, Google and Facebook, in this case, as the two tech giants refuse to foot the bill.