Livestream selling has taken the e-commerce world by storm, generating impressive revenue figures that other sales channels can only dream of. However, as this trend continues to grow, so does the issue of tax evasion. Tax regulators will crack down on tax evasion in its booming livestreaming industry.
The first livestream-selling activity in Vietnam took place in 2016, utilizing YouTube and Facebook's live feature. It quickly gained popularity, and e-commerce platforms like Shopee, Lazada, Sendo, and Tiki followed suit. In 2022, the arrival of TikTok Shop sent shockwaves through the online selling community. Now, users can interact, place orders, make payments, and receive deliveries, all within the app without any hassle.
Notable figures in the live streamers include Ha Linh who generated an estimated VND20 billion (US$785.680) in sales during her first TikTok livestream on March 15, 2023, with a peak viewership of 80,000. Other prominent names include Pham Thoai, Hang Du Muc, Quyen Leo Daily, and Pew Pew. Quyen Leo's channel set a record in early May, earning over VND100 billion after 17 hours of continuous live streaming, surpassing her own record set in March with VND72 billion.
The trend has extended beyond small and medium-sized businesses, with even major brands joining the live streaming bandwagon. In late 2023, traders in Ben Thanh Market invited celebrities to livestream with stallholders, generating over 18,200 orders in just five days. According to the Vietnam E-commerce Association, there are an average of 2.5 million livestream-selling sessions per month from over 50,000 sellers.
Livestream selling has become a popular and lucrative e-commerce channel, generating significant revenue for both businesses and individuals. However, managing and collecting taxes from this dynamic and decentralized sector presents unique challenges for tax authorities.
According to regulations, online sellers are required to pay value-added tax (VAT) and personal income tax (PIT) if their annual revenue exceeds VND 100 million. Individuals earning income from livestreaming must pay PIT ranging from 5 percent to 35 percent of their income. If the commission is paid to a business household, they must file and pay 7 percent tax, including 5 percent VAT and 2 percent PIT.
For the last time, the tax sector has monitored individuals whose incomes are generated from livestream selling while checking the payment of organizations for famous live streamers who helped organizations to do live streaming sales. The Ministry of Finance said that the sector has made significant progress in addressing tax evasion in livestream selling. Over 543 businesses and 21,616 individuals have been identified and assessed for additional taxes, generating an additional VND 2.9 trillion in tax revenue.
To effectively combat tax evasion in livestreaming sales, tax authorities in Vietnam are implementing a range of innovative strategies, including digital mapping of businesses, electronic portals for cross-border platforms and e-commerce portals.
The tax authority has been operating electronic portals for foreign service providers to facilitate tax registration, declaration, and payment since March 2022. So far, some 96 foreign service providers have paid more than VND4,000 billion through the portal. Similarly, from December 2022, an e-commerce portal has been set up for individuals and businesses to fulfill their tax obligations.
Deputy Head Mai Son of the General Department of Taxation said that tax authorities recognize that live streaming sales represent a new form of commerce and that traditional tax management approaches may need to be adapted. The sector will support businesspersons to register to pay tax as per the present regulation; however, the sector will have tough penalties on those who intentionally evade tax.
Primary, a number of individuals with substantial income from livestreaming sales have voluntarily registered for taxes, filed tax returns, and paid taxes amounting to billions of Vietnamese dong. This demonstrates a growing awareness of tax obligations among live streamers and a willingness to contribute to the tax system.
On the other hand, the sector has coordinated with commercial banks to verify the income of many people who are not willing to pay taxes. The tax sector will guide violators to register and pay fines.
According to the leader of the General Department of Taxation, the tax sector is currently collaborating with the Ministry of Industry and Trade, the Ministry of Information and Communications, the Ministry of Public Security, and the State Bank of Vietnam to share management data.
Specifically, the Ministry of Industry and Trade provides information on individuals and businesses operating on e-commerce platforms countrywide, not only those who livestream directly but also suppliers. The Ministry of Information and Communications provides livestream links.
According to the General Department of Taxation, revenue cannot be determined immediately after livestreaming, but only after successful delivery. In the past, the parties have shared data from more than 900 websites and nearly 300 e-commerce platform applications to conduct reviews and strengthen tax management in this field.
Director Nguyen Nam Binh of the Ho Chi Minh City Department of Taxation has affirmed that enhancing tax management and combating tax evasion in e-commerce activities is one of the key tasks of the city's tax sector in 2024. To achieve this goal, the tax sector will focus on implementing comprehensive reviews and inspections of tax declarations, tax payments, and the use of e-invoices by organizations, business households, and individuals engaged in e-commerce, e-commerce platforms, affiliate marketing, providing digital content and earning income from advertising, and software provision. This will be particularly focused on organizations and individuals who conduct online business, livestream sales of goods and services,
