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E-Commerce Platforms in Vietnam: Proposed New Tax Responsibilities for Platform Owners
31.10.2024In recent years, the rapid growth of e-commerce in Vietnam has prompted significant changes in the regulatory landscape. The Vietnamese government is now proposing new tax responsibilities for e-commerce platform owners to ensure better compliance and transparency. The Ecovis experts from ECOVIS AFA VIETNAM explore the current tax administration requirements and the proposed amendments to the Tax Administration Act aimed at streamlining tax declaration and payment processes for businesses operating on e-commerce platforms.
According to the existing law on tax administration and guiding documents, companies that own e-commerce platforms must provide the tax authorities with complete, accurate and timely information, as required, about traders, organizations and individuals involved in buying and selling goods and services on their platforms.
This is in line with the tax administration’s duty to collect taxpayer information, which involves not only the owners of e-commerce platforms but also other agencies, organizations and businesses.
The requirement for e-commerce platform owners to provide information to the tax authorities does not impose any additional time, effort or financial cost on businesses. This information is submitted on a quarterly basis through the Electronic Information Portal of the General Department of Taxation. To assist e-commerce platform owners in providing information about individuals conducting business on their platforms, the General Department of Taxation has been operating the E-commerce Information Portal since 15 December 2022. This portal collects information from e-commerce trading platforms about the organizations and individuals doing business on them.
Since its implementation, the E-commerce Information Portal has recorded data from 357 e-commerce trading platforms. These platforms have reported that over 191,000 organizations and individuals are participating in trading, with a total transaction value of nearly VND 59,000 billion. The General Department of Taxation has upgraded its internal application to analyze and process this data, thereby supporting tax authorities at all levels in their tax management efforts. Additionally, the tax authority continues to deploy electronic tax services to facilitate taxpayers in general, and those engaged in e-commerce in particular.
Under the current tax management regulations, individuals doing business on e-commerce platforms still must declare and pay taxes directly to the tax authorities, just like traditional commercial and service businesses, as there are no special rules. This requirement is costly in terms of time, effort, and money for both online traders and tax authorities. Many online sellers lack knowledge or experience in accounting, invoicing and documentation, making it difficult for them to declare taxes. As a result, many must hire tax accounting services, incurring additional expenses. Or, in many cases, they inadvertently owe tax and face significant late payment fees.
To facilitate business operations on e-commerce platforms, the Ministry of Finance proposes amendments to the Tax Administration Act. These amendments should include provisions for tax declaration and payment on behalf of business households and individuals engaged in business e-commerce activities, as well as cases of direct tax declaration. This reform aims to streamline administrative procedures, reduce the number of entities required to declare taxes, and align tax declaration and payment processes with the unique characteristics of e-commerce businesses.
The above content has been researched and summarized by ECOVIS AFA VIETNAM from widely published legal documents and articles. If you would like to discuss more in-depth issues, please contact us using the information below:
Nghia Tran, Partner, ECOVIS AFA VIETNAM
Da Nang City, Vietnam
Email: Nghia.Tran@ecovis.com.vn
Malaysia Special Economic Zones: Exclusive Tax Incentives to Establish Your Family Office in Malaysia’s Forest City Special Financial Zone
25.10.2024On 20 September 2024, YB Senator Datuk Seri Amir Hamzah Azizan, Finance Minister II, delivered a keynote address at the Forest City Special Financial Zone (FCSFZ) Tax Incentive Announcement Ceremony. The address highlighted the Government’s commitment to fostering investment and positioning Forest City as a competitive financial hub through attractive tax incentives. This initiative is aimed at attracting global Single Family Offices (SFOs) to establish their presence in the region, promoting economic growth and generating high-value employment opportunities.
Following this, on 23 September 2024, the Securities Commission (SC) of Malaysia outlined the Family Office Incentive Scheme, detailing the benefits available to SFOs, particularly those involved in managing substantial family assets. The SC also issued a Frequently Asked Questions (FAQ) document to clarify the mechanics of the Single Family Office Scheme, focusing on eligibility, tax incentives, and operational requirements for family offices seeking to establish themselves in Malaysia. The scheme is designed to attract high net worth families to manage their wealth locally, while supporting the nation’s investment landscape. These initiatives mark a strategic effort to position Malaysia as a leading destination for family offices, leveraging the FCSFZ as a global financial zone.
As recently announced, eligible Single Family Office Vehicles (SFOVs) can benefit from a 0% concessional tax rate on income generated from eligible investments for an initial period of 10 years. This tax incentive may be extended for an additional 10 years, provided the SFOV meets the necessary requirements during the initial period.
This table outlines the key conditions for a Single Family Office Vehicle (SFOV) to qualify for the tax incentive during the initial period.
Condition | Details |
New Investment Holding Company | The SFOV must be a newly incorporated investment holding company in Malaysia and seek pre-registration with the SC for tax incentives. |
Location of Operations | The management company or SFO, associated with the SFOV, must be established and operating in Pulau 1, FCSFZ. |
Investment Professional | At least one investment professional must be employed, with a minimum monthly salary of RM10,000. |
Asset Under Management (AUM) | The SFOV must hold at least RM30 million AUM and meet a minimum local investment in eligible investments of at least 10% of AUM or RM10 million (whichever is lower). |
Annual Operating Expenditure (OPEX) | The SFOV must incur at least RM500,000 in annual operating expenditure locally. |
Full-Time Employees | The SFOV must employ at least two full-time employees, each receiving a minimum monthly salary of RM10,000, with at least one being an investment professional. |
This table outlines the conditions for SFOVs to qualify for an additional 10 years, which include:
Condition | Details |
Asset Under Management (AUM) | The SFOV must hold at least RM50 million AUM and invest a minimum of 10% of AUM or RM10 million in eligible local investments, whichever is higher. |
Annual Operating Expenditure (OPEX) | The SFOV must incur an annual local operating expenditure of at least RM650,000 (30% higher than during the Initial Period). |
Full-Time Employees | The SFOV must employ a minimum of four full-time employees. |
As highlighted in the FAQ, the detailed terms and conditions of the Family Office Incentive Scheme will be made available on the SC’s official website by the first quarter of 2025 at https://www.sc.com.my/development/single-family-office. Interested SFOVs are encouraged to visit the website regularly for the latest updates and information. This resource provides comprehensive guidelines on eligibility, compliance, and the specific requirements to qualify for the scheme.
Ang Henn Ann
Tax Partner
ECOVIS MALAYSIA TAX SDN BHD
hengann.ang@ecovis.com.my
Simplex Portugal: Paradigm shifts and the increased need for legal support in real estate
25.10.2024Throughout 2024, the Portuguese government has implemented a legal package named Simplex. It includes measures to overcome challenges related to a lack of housing and simplifying urban planning and licensing, in line with a “zero licensing” philosophy.
It is a common complaint in the real estate market in Portugal that licensing was inherently slow and complicated. One of the results of this was uncertainty as to when construction could start and how long it would take to gain approvals, say the Ecovis experts on the need to introduce Simplex.
The changes introduced with Simplex aim to simplify and speed up procedures, either by eliminating or softening legal requirements for assessing projects, or by eliminating the intervention of licensing bodies. In Portugal, urban licensing and planning is mostly a competence of the municipalities, which are now also obliged to use a standardised electronic platform for planning procedures.
The two paradigm shifts in the Simplex legislative package
The major change with Simplex is the removal of the control of urban licensing from a phase prior to the execution (prior control) to the moment of execution or even completion.
With Simplex, developers can, in some cases, prepare all the project documents, together with statements from the authors assuming responsibility for their work, submit that package to the municipality, pay the taxes due, and simply start construction. Prior validation by public entities has simply been removed.
Seek advice on real estate transactions, because building regulations have not become any easier.Gonçalo Areia, Managing Partner, RBMS – Member of ECOVIS International, Lisbon, Portugal
On the transactional side of the real estate market, Simplex has also eliminated the need to present usage licensing documentation at the time of closing a deal, creating another paradigm shift in the responsibility for the legality of constructions. The absence of a requirement for sellers to provide these documents during closing streamlines the transactional side but puts more responsibility on the side of the buyer for the legality of the construction being purchased.
Demand for advice for those wishing to build is increasing
All these measures increase the need for holistic support in real estate. On the one hand, this means strong legal and technical knowledge to support real estate developers through the construction phase (safeguarding compatibility of projects with zoning regulations). On the other hand, it is important to provide support on the pre-contractual and transactional side of real estate, with proper due diligence on the legality of the property and full lawfulness of the transaction, before irreversible financial commitments are made.
For further information please contact:
Gonçalo Areia, Managing Partner, RBMS – Member of ECOVIS International, Lisbon, Portugal
Email: goncalo.areia@rbms.pt