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Last updated: Thursday, April 18, 2019


Tax Challenges in Digitalisation Discussed

Posted: Wednesday, September 26, 2018

The Association for Chartered Certified Accountants (ACCA) in collaboration with the HCMC Tax Department and PwC Vietnam held the seminar “Tax challenges in digitalisation” in September 13, 2018 in HCMC.

The seminar attracted approximately 300 participants, which is led by international and Vietnamese experienced & prestigious tax experts: Chas Roy –Chowdhury – Head of Taxation ACCA Global, Do Quoc Tuan, Deputy Director of Audit Department in charge of taxing e-commerce project of HCMC Tax Department and Nguyen Thanh Trung, Tax & Legal services Partner of PwC Vietnam (FCCA).

The seminar is part of the series of Industry 4.0 and its impact to the accounting profession of ACCA Vietnam, 10th anniversary of Vietnam Tax Consulting Association (VTCA) and the urgent need on tax administration of e-commerce solutions in the revision of the tax administration law of Vietnam. Chas Roy –Chowdhury represents ACCA at the Business and Industry Advisory Committee to the OECD (BIAC) and sits on the EC Platform for Tax Good Governance. He also involves with technical groups on VAT and financial information exchange. He also chairs the Taxation Working Group of European Association of Craft, Small and Medium-sized Enterprises.

Prior to the HCMC event, in the 10th of September 2018 in Hanoi, Chas Roy -Chowdhury co-chaired the joint ACCA-VTCA seminar on the same topic which attracted approximately 150 participants. Chas also shared at the technical roundtable in Hanoi on the 11th September 2018 with the General Department of Taxation and relevant departments of the Ministry of Finance on tax challenges in digitalisation and solutions updates from international experience.

Nguyen Thuy Minh Chau –Head of ACCA Mekong said: “Tax has been always a primary interest of business, especially in the digital age with creation of new business models, greater reliance of business on data, cyber risk, etc. Tax policy and administration has also been changed to respond to technology advancement and the ever-changing business environment. This impacts business operating results, future business strategies and responses of business to tax compliance risk. ACCA is proud to collaborate with the Ministry of Finance of Vietnam, the General Department of Taxation, HCMC Tax department, VTCA and business community in this new and challenging area- taxation in digitalisation.”

“The global digital landscape even after all the recent work in this area by the OECD in dealing with base erosion and profit shifting otherwise known as BEPS is still in turmoil” said Chas Roy – Chowdhury at events in Hanoi and HCMC. “While BEPS action 1 – the Digital Economy – went a long way in looking at tech companies and deciding they could not be taxed differently from the bricks and mortar the G20 have asked the OECD to look again, as many countries are lining up new taxes specifically aimed at the digital economy.

The OECD is scheduled to conclude its work on the digital economy in 2020 with an interim paper published in March 2018 and another due in 2019 with the final draft proposals in 2020. The problem is that some jurisdictions are pushing ahead with their own version of a digital tax especially the EU. The EU proposal is one where a 3% levy would be applied to the turnover, not profits, of a digital company. First off the 3% levy, or tax, on turnover sounds low but could be equal to as much as 80% of the profits of the company. But second it completely throws the world order on tax rights based upon there a permanent establishment (PE) out of the window.

If other jurisdictions such as the US followed the EU model and just taxed turnover generated in their country, disregarding that there was no PE, then why would the US for instance not tax German Car companies’ turnover on their soil. The EU needs to seriously rethink its digital tax proposals as it will only make the already significant global trade friction even worse.”

At these events in Vietnam, business expressed their concern on the definition of permanent establishment in Vietnam in digital economy, how Vietnam tax e-commerce such as online advertisement, user data sale, on-line hotel booing, services provided on Google- Facebook-Amazon, etc. as well as recommendations on support and advocacy from tax department to taxpayers so as to avoid tax compliance risks.

The Ministry of Finance of Vietnam, the General Department of Taxation, HCMC Tax department and VTCA well-noted concerns and recommendations of business attending these events as well as international experience from ACCA for the revised tax administration law aiming at international practice relevance and un-competitiveness avoidance, which include the following:
  • Continue to advocate, support and facilitate those involving digital business transactions declare and pay tax
  • Collaborate with the Ministry of Telecommunication & Information and telecom businesses to collect, analyse and process data on e-commerce
  • Collaborate with State Bank of Vietnam to work on a national payment portal and collaborate with banks to track money flow in and out of Vietnam for relevant taxation
Taxing e-commerce is among important areas of the revised tax administration law to be discussed at the year-end National Assembly sitting of Vietnam. Taxing e-commerce that reduces un-competitiveness while nurture and enable the digital economy vibrant development is the global challenges.


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