Official: Leveraging Big Data for Tax Collection from Foreign Service Providers

According to a tax official, leveraging big data on e-commerce can significantly improve the efficiency of tax collection from foreign cross-border IT service providers. Recent statistics reveal that major players such as Google, Apple, Facebook, Netflix, TikTok, and Microsoft paid approximately VND4 trillion ($169.5 million) in taxes during the first half of this year, surpassing the VND3.5 trillion collected in the entire previous year. However, the tax revenue generated from these providers remains modest compared to the booming retail e-commerce market, which reached $16.4 billion in 2022 and is projected to grow by 25% to $20.5 billion this year, as reported by the Vietnam E-commerce and Digital Economy Agency.

Among the cross-border digital platforms, Meta (Facebook), Google, Microsoft, TikTok, Netflix, and Apple account for about 90% of the revenue in Vietnam. In the digital advertising sector, platforms like Facebook, YouTube, and TikTok generated $2.5 billion in revenue in 2023, with an estimated $3.4 billion expected this year, according to Kantar Media Vietnam.

Nguyen Bang Thang, the director of the Tax Management Department of Large Enterprises, emphasized that the tax watchdog will continue to support foreign providers and domestic businesses operating in Vietnam while strictly enforcing penalties for violations. The tax authority regularly collaborates with relevant agencies to analyze tax declaration risks and implement appropriate measures. International experiences from countries like the United States and the European Union demonstrate the critical role of big data in e-commerce for efficient tax management on cross-border platforms.

Recognizing the tax losses in e-commerce, Nguyen Thi Minh Huyen, the deputy director of the Vietnam E-commerce and Digital Economy Agency, acknowledged that the legal framework for tax collection in the industry is still being improved. Huyen highlighted the necessity of establishing a mechanism for data sharing among relevant management agencies to prevent cross-border tax evasion. Hoang Van Cuong, a deputy of the National Assembly’s Finance-Budget Committee, emphasized the importance of prioritizing digital transformation to ensure sufficient data for effective tax management. The Ministry of Finance aims to increase domestic tax collection by 5-7% in 2024, with a specific focus on enhancing tax collection efficiency in cross-border e-commerce.