Vietnam has moved to delay an online tax that is facing resistance from e-commerce companies just days before it was supposed to take effect as the country grapples with a worsening COVID-19 outbreak.
“The Finance Ministry is submitting to the government the postponement of the implementation of Circular 40 on taxes to create more convenience for taxpayers,” the ministry said on its website on Sunday night. The circular would require businesses like Shopee, the e-commerce unit of Singapore’s Sea, and Lazada, owned by Alibaba Group Holding, to withhold taxes for merchants on their platforms each time a sale is made.
The regulation was to take effect August 1 but that could be pushed back to January 1, 2022, according to a post on a government news site. The post was a recap of Finance Minister Ho Duc Phuc’s remarks to the National Assembly this weekend, where he laid out proposals to help citizens during Vietnam’s deadliest COVID outbreak, including tax breaks and cash aid.
As more transactions move online, Vietnam has sought to ensure e-commerce companies shoulder the same tax responsibilities as their offline counterparts. While e-commerce sites withhold taxes elsewhere, such as the state-by-state levies that Amazon collects in the United States, businesses operating in Vietnam say they did not have time to prepare for Circular 40, which was published on June 1.
Tiki, the largest Vietnamese e-commerce marketplace, said it is waiting for authorities to detail “steps to be taken, the implementation time at each stage, and specific documents on calculation methods, tax declaration forms, and accounting.”
“E-commerce platforms also need more time to work with, guide and reach agreement with brand partners and sellers,” the company said in a statement before the Finance Ministry’s announcement.