Accordingly, tax compliance for enterprises is shifting from a focus on fully and accurately fulfilling tax filing and payment obligations towards tax governance and ensuring data consistency. This trend is particularly noteworthy in the context of the rapid development of e-commerce, digital platforms, and cross-border transactions, which calls for further development of tax administration mechanisms.
| Phan Anh Vu, partner, and Nguyen Thi Bao Ngan, legal assistant Indochine Counsel |
Against this backdrop, Decree 252 further develops the legal framework for tax administration by enhancing data utilisation and connectivity, increasing the use of electronic transactions, strengthening the management of business activities conducted through digital platforms, and applying compliance- and risk-based management approaches.
Decree 252 further develops the tax administration framework applicable to business activities conducted through e-commerce and digital platforms, including clarifying the obligations of e-commerce platform operators to withhold, declare, and pay taxes on behalf of taxpayers.
Accordingly, for transactions generating revenue in Vietnam from business activities conducted through e-commerce platforms, e-commerce platform operators that provide online ordering and payment functions, whether domestic or international, are required to withhold and pay the applicable taxes on behalf of business households and individuals, including foreign suppliers, conducting business through such platforms.
Such platform operators are also required to manage the usernames and passwords of accounts issued by the tax authorities and retain transaction data, information, and supporting documents relevant to determining the tax payable and tax withheld. Proper management of such information is important to mitigate the risks of inaccurate, incomplete, or late withholding and payment of tax on behalf of third parties.
To enhance the effectiveness of tax administration, Decree 252 further develops a compliance- and risk-based approach, enabling tax authorities to allocate their resources more efficiently by shifting from broad-based management towards more targeted supervision.
Under this approach, taxpayers are classified based on their levels of compliance and tax risk. Taxpayers with good compliance records may benefit from incentives, such as consideration for recognition and preferential treatment, while high-risk taxpayers may be subject to enhanced monitoring, inspection, and supervision.
For example, Decree 252 further develops the mechanism for temporary suspension of exit to strengthen tax debt administration while providing taxpayers with an opportunity to remedy their outstanding obligations. In particular, for individuals who are beneficial owners or legal representatives of enterprises, cooperatives, or cooperative unions subject to tax enforcement measures, temporary suspension of exit may be applied where the outstanding tax debt is VND500 million ($19,000) or more and has been overdue for more than 120 days.
On this basis, tax administration in Vietnam is accelerating its digitalisation through data-driven management, integration with national databases, and the use of artificial intelligence to support compliance, tax administration, inspection, and taxpayer classification.
While greater reliance on technology and data may raise concerns over data security and system failures, Decree 252 provides safeguards by requiring information disclosure only to the extent necessary for tax administration and compliance, in accordance with personal data protection and cybersecurity regulations. Importantly, taxpayers will not be penalised for delays in fulfilling tax obligations caused by system failures.
In the longer term, data- and risk-based tax administration will increase the tax authorities’ ability to cross-check enterprise information from multiple sources. Enterprises should therefore move beyond merely completing tax returns towards proactively managing data quality and ensuring that tax, accounting, and e-invoice information is accurate, complete, and consistent.
Taxpayers with good compliance records and low risk may not only be considered for commendation and rewards but may also benefit from preferential treatment in tax administration, such as automation of procedures, shorter processing times for applications, and priority in inspection, supervision, and support methods.
To qualify for preferential treatment, taxpayers must maintain a good compliance rating and a low-risk rating for at least two consecutive years, while meeting requirements relating to tax data connectivity and sharing; electronic data management and storage; internal controls and tax risk management; and compliance with reporting regulations.
This incentive mechanism provides businesses with a greater incentive to comply, as proper compliance with tax laws can bring tangible benefits, such as reduced administrative procedures, shorter tax refund processing times, and priority in the processing of tax applications.
To strengthen cooperation in tax admin, transfer pricing control, base erosion prevention, and cross-border transactions, Decree 252 specifies mechanisms for tax cooperation and admin assistance between Vietnamese and foreign tax authorities and international organisations.
Accordingly, Vietnamese tax authorities may request foreign tax authorities to assist in collecting tax debts owed by Vietnamese taxpayers who are no longer present in Vietnam, and may provide tax collection assistance at the request of foreign tax authorities pursuant to applicable international treaties.
Decree 252 provides for simultaneous tax inspections by Vietnamese and foreign tax authorities, including principles for coordination, consultation, and the conduct of inspections in cases involving common or related interests. Enterprises should prioritise ensuring consistency across data, reviewing internal procedures, and monitoring their compliance status and notifications from the authorities.