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Facebook, Google must pay Vietnamese taxes: ministry

Update: April, 11/2012 - 10:50

HA NOI — Viet Nam had the right to levy taxes on all transactions involving sales made in the country, including online advertising services provided by Google and Facebook, said deputy director of the Ministry of Finance's Tax Policy Department Nguyen Van Phung at a conference yesterday in Ha Noi.

Phung told the conference titled "Tax issues in cross-border e-commerce" that foreign enterprises made money from sales in Viet Nam, and whether they were goods or services exchanged via cross-border e-commerce or not, an amount of Vietnamese money was being transferred overseas.

"So, businesses, wherever they operate, should pay taxes," Phung said.

Le Hong Minh, general director of Vinagames Co, said that Vietnamese companies were losing out in the domestic market because while foreign e-commerce companies conducting business in Viet Nam were not subject to taxation, Vietnamese businesses had to pay a 10 per cent value-added tax.

Minh even raised the possibility that it would be more profitable for them to be based in another country and then sell goods back to Viet Nam without paying tax.

According to Vietnamese companies, technology giants including Google and Facebook should comply with the Government's tax laws to ensure fairness among companies doing business in digital content.

However, one of the reasons that partners of Google and Facebook in Viet Nam gave for the alleged tax evasion was that they had paid taxes in foreign countries which had signed agreements to avoid double taxation with Viet Nam.

Responding to this problem, Phung said enterprises eligible for the tax exemption under the double taxation treaties must submit evidence.

He added the current taxation method was to collect taxes at the source, so agents and partners of Google and Facebook in Viet Nam were subject to taxation, including 5 per cent value added tax and 5 per cent corporate income tax.

Google is the most common search site in Viet Nam. In Southeast Asia, around 80 per cent of internet users use the Google search engine, while according to digital analytics company Social Bakers, about 3.5 million Vietnamese people use Facebook. — VNS

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