The Draft Circular provides guidance on the tax compliance procedure, tax refund, the tax audit process and other tax administration related subjects. The draft is in particular relevant for e-commerce activities and digital-based businesses.

31 Mar 2021



The General Department of Taxation (GDT) has released a draft circular to guide the implementation of the 2019 Law on Tax Administration and Decree No. 126/2020/ND-CP guiding some provisions of the Law on Tax Administration (Draft Circular). The Draft Circular seeks to provide detailed guidance on the tax compliance procedure, tax refund, the tax audit process and other tax administration related subjects. In particular, the Draft Circular provides definitions of activities and business entities falling within the scope of the regulations on registration, declaration, and payment of tax in relation to e-commerce activities and digital-based businesses.

1. Scope of Activities

Article 3 of the Draft Circular defines e-commerce activities and digital-based business very broadly.

1.1 E-commerce Activities

E-commerce activities is defined as conducting part or the entire process of commercial activities by electronic means connected to the internet, mobile telecommunications networks or other open networks.

1.2 Digital-based Business

Digital-based business is defined as the provision of services through the internet or an electronic network and the nature of such provision is basically automated with minimal human intervention or no human intervention at all and cannot be done without using information technology. Some examples could include accommodation booking service such as Agoda, Airbnb, advertising via mobile apps, social networks etc.

2. Tax Registration, Declaration and Payment

Article 84 of the Draft Circular identifies the following entities as being responsible for tax registration, tax declaration and tax payment for e-commerce business activities and digital-based business:

- suppliers that do not have a fixed business location in Vietnam and conduct e‑commerce or digital-based business with organisations and individuals in Vietnam that are considered to have a permanent establishment in Vietnam;

- Vietnam-domiciled organisations or individuals that purchase goods or services from overseas suppliers;

- organisations, tax agencies operating under Vietnamese law and authorised by an overseas supplier to perform tax registration, declaration, payment in Vietnam; and

- commercial banks and intermediary payment service providers (IPSP); and organisations and individuals having rights and duties related to e‑commerce or digital-based business by overseas suppliers.

3. Electronic Portal

Tax registration, declaration and payment by overseas suppliers will be conducted through tax registration, declaration and payment system on an electronic portal run by the GDT. Under Article 96.4 of the Draft Circular, if the system is activated after the circular becomes effective, overseas suppliers will conduct the registration and start declaring tax only after the system is online and functioning. However, tax is incurred from the effective date of the circular, but there will be no interest for relevant tax payment pending during the period running from the effective date of the circular until the tax declaration.

4. Tax Calculation

Payable taxes will include VAT and CIT, calculated at the deemed rates under Circular No. 103/2014/TT-BTC regarding foreign contractor tax on revenues derived in Vietnam.

5. Tax Payment

Under Article 89.1(a) of the Draft Circular, overseas suppliers having completed tax registration will pay tax directly on a quarterly basis, while under Article 94.2 and 94.5 of the Draft Circular, banks and IPSPs will withhold and pay tax on a monthly basis for overseas suppliers that have not conducted tax registration in Vietnam.

6. Revenue Determination

Under Article 89.4 of the Draft Circular, the following information is used to determine revenue derived in Vietnam for tax declaration, and tax payment,:

- payment information (credit card or bank account information),

- residency information (i.e., billing, delivery or home address) and

- access information (e.g., mobile phone country code, IP address, and landline address).

7. Points to be Revised or Clarified

The Draft Circular contains several points that need to be clarified to ensure smooth practical implementation. One of the most notable points is that the tax exposure of overseas suppliers in the Draft Circular could contradict Double Taxation Agreements to which Vietnam is a member. Some other points include implications of non-registration, or procedure to claim tax treaty protections.

It is therefore expected that the Draft Circular will be revised before being issued.

For more information, please contact:

Huyen Pham / Senior Associate


Duc Tran / Associate


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This legal update is not an advice and should not be treated as such.

Open in pdf: Draft Circular Guiding Implementation Law on Tax Administration