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MOF: Vietnam has the right to tax Google and Facebook
Under the current Vietnamese laws, the companies like Google and Facebook have to pay tax for the income gained from the business activities in Vietnam, said Nguyen Van Phung, Deputy Director of the Tax Policy Department of the Ministry of Finance (MOF).
Facebook's, Google's agents suspected of evading tax in Vietnam
Whether the social networks such as Google and Facebook have to pay tax for the income they get from the business activities in Vietnam, and whether they try to evade tax has been the hot topic on many forums.
On the issue, Phung said on Buu dien newspaper that the Vietnamese tax policies stipulate that the government of Vietnam has the right to tax on all income resources generated in Vietnam.
The government’s Decree No. 124/2008--guiding the implementation of the Corporate Income Tax law and the MOF’s Circular No. 134/2008--stipulating the tax duties of foreign institutions and individuals who do business in Vietnam and have income in Vietnam, both stipulate the Vietnamese government’s right to tax the subjects through the contractor withholding tax.
This means that the government of Vietnam has the right to tax on the earnings from online advertisements in Vietnam, and if Google and Facebook do not pay tax, this means that they are evading tax.
Local newspaper VnExpress several days ago quoted a Vietnamese advertisement agent as saying that Vietnam does not have the right to tax Google, because Google pays tax in Ireland, the country where it headquarter is located, already. Meanwhile, Vietnam and Ireland have signed the double taxation avoidance agreement.
However, Phung has affirmed that the people, who cited the agreement to make such a conclusion, have misunderstanding about the agreement.
The agreement stipulates that businesses have to pay tax in the countries where their income is generated. In other words, Google has to pay tax in Vietnam for the income generated in Vietnam.
Some experts have said that it is very difficult to find the behaviors that generate income in Vietnam in the Google’s ad system, because users can book ads from everywhere with just a mouse click.
On this issue, Phung said that the enterprises which want to book online ads will have to negotiate with Google and pay service fee based on the number of ad viewers. He affirmed that the figure would be found at every IP, because enterprises would demand exact figures of viewers, while they would not “throw money through the window.”
MOF would trace Google’s partner businesses
It is clear that MOF cannot tax on Google and Facebook directly. Therefore, Phung said that the best solution to collect tax from online ad services is to trace the Vietnamese businesses which are the partners of the foreign social networks.
Under the Vietnamese tax management law, the Vietnamese businesses which act as the partners of foreign companies, when making payment with the foreign partners, have to withhold money for the contractor tax. If they do not do that, they will have to pay tax instead of Google.
“The partners of Google and Facebook have to strictly follow the tax duties, while they must not lend a hand to the attempt to evade tax,” Phung said.
Analysts believe that online ad services can bring high turnover to Google and Facebook. In Vietnam, the 9 official ad agents of Google make up 50 percent of the total revenue from online ads in the domestic market.
Meanwhile, to date, Vietnamese taxation bodies have not collected any dong in tax from online ad services provided by Google and Facebook
The Vietnamese ad agents have to take the responsibility of declaring tax and paying tax for the foreign partners. However, there are only 9 Google’s agents in Vietnam, while Facebook has no agent.
vietnamnet
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