New withholding tax rules applicable to non-resident enterprises selling goods and services into Vietnam via digital and e-commerce supply chains are effective in Vietnam beginning 1 January 2021.
Recognizing that the sale or supply of goods and services to individuals via an e-commerce business model may have historically fallen outside the scope of the Vietnamese income tax system, the new withholding tax rules are intended to address this gap. Specifically, payments made to “non-resident e-commerce businesses” (a term not yet defined) will be subject to a new withholding tax, to be collected by financial intermediaries such as banks. This withholding tax will apply to all designated business-to-consumer (B2C) and business-to-business (B2B) transactions.
Originally, implementation of the new e-commerce withholding tax regime in Vietnam was to be effective 1 July 2020. This effective date has been postponed for six months, and will be effective 1 January 2021 (even though the mandated effective date in the law is 1 July 2020).
Source Credit – KPMG