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REVIEW of FINANCE - Issue 4, 2021
application in invoice and document comparison, declaring Revenue from online advertising based on these platforms
and generating tax refunds are handled in a more streamlined is huge, but it is difficult to manage and verify such amount
way, saving time for enterprises. because the number of tax-incurring subjects is too large on
Digital transformation is also applied by the General the online platforms. GAFAs usually pay the total income to
Department of Taxation in the supervision and inspection their partners without deduction at the source because the
of tax authorities. The centralized tax management system deducted amount if withheld will have to be remitted into
has supported in decentralizing inspection, supervision the budget of another country instead of the GAFA's home
tasks of the tax authorities and timely settlement of country. In case their partners are individuals in Viet Nam
taxpayers’ problems and complaints through the system. having income from these sources, the tax risk is considerably
Minimizing post-audit complaints and shortening the large. Because most individuals doing business in this form
complaint review process. often pay little attention to tax obligations or intentionally
3.3. Tax management for online businesses avoid taxes based on online platforms.
3.4. Tax Administration on Cryptocurrencies
In addition to the positive achievements, business activities
and transactions in the context of digital transformation also Cryptocurrencies and digital currencies are two
showed limitations, especially for complex transactions in completely different concepts. Digital currency is the
cyberspace. digitization of money circulating in the economy at a certain
Domestic online business activities. conversion rate, so it does not have a big impact on monetary
According to the Law on Personal Income Tax, individuals security and transaction problems. On the contrary, digital
with an average annual income of over VND 100 million currencies also help e-commerce activities become more
must pay 7% of such income (PIT 5% and VAT 2%) for tax. convenient and transparent and easier to manage taxes.
However, with online business activities conducted through Cryptocurrencies or crypto is still a new concept but has
connected platforms such as livestream, Zalo, Viber, it is been accepted for payment in many countries around the
difficult to verify these transactions and even more difficult world. Since cryptocurrency is also a form of converting
to determine the taxable income threshold. This problem normal operations to digital activities, it can be widely
becomes more complicated when many online transactions viewed as a form of digital transformation. However,
in real life often use cash, not through bank transfers. there is still a lot of debate about the effectiveness of this
Obviously, digital transformation has had positive impacts currency. Many arguments have indicated that due to the
on the economy in this case. By switching business and characteristic of cryptocurrencies which is the impossibility
transaction methods, buyers and sellers can easily match and to actively control the money supply, the functions such as
satisfy their needs, and prices are adjusted according to the payment, storage, investment, exchange, ... of this currency
market mechanism. However, the tax administration risk for are unclear. Due to the absence of a legal framework to
these activities is huge. The most recent example is the case regulate this type of currency, tax charging for income
of livestream sales in Lao Cai province with a warehouse of from cryptocurrency investment cannot be implemented.
more than 10,000m where all goods are smuggled. With a In fact, there are still many Vietnamese investors who earn
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monthly revenue of over VND 10 billion, these smuggled very high income from cross-border online cryptocurrency
goods have caused a deficit of hundreds of billions of VND investments. If digital transformation is an inevitable
in import tax and domestic taxes. trend of the era, then cryptocurrency is said to be one of
Crossborder online business activities. the consequences of that irreversible trend. Therefore, it is
For domestic business activities, “deduct at the source” necessary to have specific studies on this activity to design
is a widely used principle for current or ad-hoc income. appropriate tax management policies.
Accordingly, taxpayers with extra income in addition to
regular income will incur tax obligations. This obligation 4. Conclusions and policy recommendations
may be paid by an organization or individual on behalf 4.1. Conclusions
of the taxpayer by withholding the payable amount at the
source before paying the income. Thanks to this principle, Viet Nam's economy since Renewal in general and
a significant amount of personal income tax and contractor the past decade in particular has achieved many positive
tax have been promptly declared and remitted into the State achievements. With an average economic growth of 6-7% per
budget. Most digital businesses such as Lazada, Tiki, Sendo, annum in the context of strong digital transformation, there
Grab deduct and pay taxes on behalf of partners who are is a great promising potential for the country development
income-generating workers such as digital drivers, shippers, in the coming time. However, the COVID-19 pandemic has
partner households... slowed down this growth due to the dual impact on the
Unfortunately, this model has not been effectively internal economic force and the international market.
applied to cross-border online activities, especially for large Understanding that digital transformation is an inevitable
technology companies such as Facebook, Apple, Google, matter of the development trend, Viet Nam has set out a
Amazon (GAFA) due to the complexity of transactions. strong transformation plan, a roadmap to 2025 and a vision to

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