Vietnam: Foreign digital platforms face tight deadline for new tax withholding rules

Foreign and domestic e-commerce and digital platforms operating in Vietnam must act swiftly to comply with newly introduced tax withholding obligations, effective July 1, 2025, under Decree No. 117/2025/ND-CP. The implementing decree follows recent amendments to Vietnam’s value-added tax (VAT), tax administration, and personal income tax laws as part of the country’s broader tax reform strategy through 2030.

Key withholding obligations under Decree 117

• Platforms with payment functions, including offshore and onshore operators, must withhold, declare, and remit VAT and personal income tax (PIT) on behalf of individual sellers.

• Withholding tax rates vary based on the nature of the transaction and the seller’s residency:

  • 1.5% or 2% for sales of goods

  • 7% or 10% for provision of services

• The first due date for filing and payment is set for August 20, 2025.

Major challenges for platforms

1. Inconsistent effective dates across tax laws

• The amended law on tax administration took effect April 1, 2025,

• The amended personal income tax law became effective January 1, 2025,

• The new VAT law becomes effective July 1, 2025, creating confusion over the applicable timeline.

• While the implementing decree provides clarity, the compressed schedule poses a major burden for platforms, especially foreign ones.

2. Delayed guidance and tight implementation window

• Official implementing guidance was only recently released, giving platforms a limited window—less than two months—to ensure compliance with the new tax reporting and remittance obligations.

3. Data privacy and cross-border compliance

• Platforms must collect and process personal data of individual sellers (e.g., names, tax IDs, residency), potentially triggering cross-border data transfer restrictions under Vietnam’s personal data protection regime.

• Foreign platforms, in particular, may need to revise data processing policies and complete data transfer impact assessments to lawfully collect seller data.

4. Unclear procedural rules for foreign platforms

• Foreign platforms without legal presence in Vietnam must still comply with obligations traditionally reserved for domestic entities, including:

  • Issuing electronic tax withholding certificates

  • Filing detailed tax annexes

• Vietnam requires such certificates to be issued via certified domestic service providers, but Decree 117 does not specify whether foreign platforms must engage local providers or if they can self-issue.

5. System adaptation and compliance readiness

• Platforms will need to:

  • Develop mechanisms to classify sellers as individuals or entities

  • Collect and validate residency status

  • Adjust invoicing and payment systems

  • Generate withholding tax documentation

• According to industry estimates, foreign platforms may require 9–12 months to fully prepare—far beyond the current compliance window.

Industry concerns and policy response

The rollout follows a previously unsuccessful attempt to introduce similar obligations in 2021, which was ultimately abandoned due to industry opposition. This time, the amended laws provide a more robust legal framework, but the abrupt implementation and lack of clarity continue to raise concerns among affected stakeholders.

Tax professionals stress the need for clear, actionable guidance and realistic implementation timelines, especially for foreign platforms unfamiliar with Vietnam’s domestic compliance infrastructure.

Source: chinhphu.vn

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*These rates are only indicative. Please use at your own discretion. Last update: 26/08/2024