While content creators and app developers for YouTube, Facebook, and Apple, among other big tech platforms, are under the Vietnamese taxman’s scrutiny for their income from e-commerce activities, a drove of petty sales on cyber buy and sell groups are still slipping under the radar. 

Various buy and sell groups, oftentimes entitled ‘cho dau moi’ (wholesale markets), can be found on Facebook.

Each of them specializes in a category -- snacks, clothing, and the like -- or a specific item, durian, avocado, and others.

Cyber kiosks

When compared with a traditional market space, these buy and sell groups aggregate a seismic number of members, which often reach some six digits.

According to a Tuoi Tre (Youth) newspaper correspondent, these groups allow advertisers to promote products on their platforms for a fee, usually collected as a membership charge.

The charge is not in place until the group grows to a decent size, as group administrators usually let sellers and buyers interact freely to grow the community at first.

To sign up for membership, sellers must submit their personal information as well as ID number, plus a specific fee. In return, they receive a number for their virtual kiosk in the marketplace. 

In the most bustling groups, fees can go up to VND1.6 million (US$70) per year.

Members have the right to push their post directly to the group’s feed without having to wait for administrators’ approval, while choosing the ‘golden hours’ to run ads so that they can reach more customers, a group stated in its policy.

While non-paying members can still promote their products on these groups, they will have to wait an unspecified amount of time to get their posts approved.

In several cases, a group does ban no-paying members from advertising on their platforms.

Who will shell out?

Despite earning much from advertising, the buy and sell groups in Vietnam have paid a little amount of tax in recent years.

This negligence is partly due to the taxman’s prioritization of taxing content creators and app developers, which share the ‘e-commerce revenue’ category with online marketplace sales, said Ta Thi Phuong Lan, deputy head of the Tax Administration Department that is in charge of small and medium enterprises, business households, individuals under the General Department of Taxation. 

E-commerce platforms, including buy and sell groups for traditional goods and services like food, drinks, and consumer products, will be monitored carefully in 2021, the tax official added.

The tax bodies are tightening the leash on e-commerce activities on the basis of the Law on Tax Administration, most specifically those in Ho Chi Minh City and Hanoi where trade is the liveliest.

As per the law, individuals who sell their own consumer items will not be subject to taxation, but other non-consumer items such as ships and yachts would require a certificate of origin to be eligible for sale. 

Trading personal items would also be taxed if they are classified as business activities. 

Trading platforms are obliged to collect information on sellers, including personal details and total revenue, and hand them over to the taxman when required.

In reality, most e-commerce sites are aware of the income of sellers on their platforms, even if the transactions are made in cash. 

“Requiring the platforms to file and pay tax on behalf of the sellers will be very convenient for the tax authority, as they have the legal position and cash flow to do so,” Lan pointed out.

Draft law

The General Department of Taxation are collecting feedback on a draft law regarding taxation of individual sellers of e-commerce platforms, which offer two options. 

While the first option requires sellers to pay their own tax, the other demands that the e-commerce platforms, including Tiki, Shopee, Lazada and Sendo, to file and pay tax for the sellers if they handle the cash flow from these shops.

The taxman will contemplate the optimal choice to maintain the strict regulation of tax responsibility in cyber marketplaces, while also encouraging e-commerce in Vietnam.