DECREE 117/2025/NĐ-CP: TAX ADMINISTRATION FOR HOUSEHOLDS AND INDIVIDUALS ENGAGED IN BUSINESS ACTIVITIES ON E-COMMERCE AND DIGITAL PLATFORMS

In order to enhance the effectiveness of tax administration over online business activities conducted by organizations and individuals engaged in e-commerce and digital platform activities, on 09 June 2025, the Government promulgated Decree No. 117/2025/ND-CP on tax administration for business activities on e-commerce and digital platforms by households and individuals (“Decree 117”). Decree 117 shall take effect from 01 July 2025 and shall replace relevant provisions of Circular No. 40/2021/TT-BTC (“Circular 40”). Compared to Circular 40 – which already provided tax obligations for business households and individuals, including those operating via e-commerce platforms – Decree 117 specifically provides a separate regulatory framework for organizations operating e-commerce and digital platforms and for households and individuals doing business on such platforms. Below are several key highlights of Decree 117 as updated by ATA Legal Services:

1. Scope and Regulated Entities

Decree 117 provides specific regulations on tax administration applicable to business activities conducted on e-commerce and digital platforms, including e-commerce trading platforms and digital platforms with payment functionality. The regulated entities include:

• Organizations operating e-commerce platforms, including:

  • Organizations operating e-commerce trading platforms and digital platforms with payment functionality;

  • Organizations engaging in digital economic activities that are subject to withholding and tax remittance obligations.

• Households, resident individuals, and non-resident individuals engaging in business activities on e-commerce and digital platforms;

• Tax authorities and other relevant organizations and individuals.

Under Decree 117, the term "e-commerce platform" includes both e-commerce trading platforms and digital platforms such as social networks, mobile applications, websites, etc., that support transaction connection or payment.

Organizations operating e-commerce trading platforms or digital platforms with payment functionality are identified as platform operators, providing payment methods such as e-wallets, bank cards, bank transfers, integrated payment systems, cash on delivery (COD), and other payment instruments as prescribed by law.

An “organization engaged in other digital economic activities” refers to a Vietnamese organization that, on behalf of a foreign e-commerce or digital platform provider, makes payments to households and individuals for income from digital content services and products, in accordance with legal regulations.

2. Applicable Withholding Tax Rates for Goods and Services Provided on E-commerce and Digital Platforms

The taxable revenue is the amount earned from the sale of goods and services by households and individuals and collected through the platform operator. The withholding tax rates, while similar to Circular 40, are specifically applied to transactions on e-commerce and digital platforms, as follows:

a) Value Added Tax (VAT) – applicable to all entities:

• Goods: 1%

• Services: 5%

• Transportation and services associated with goods: 3%

b) Personal Income Tax (PIT):

Note: Where it is not possible to determine whether the transaction relates to goods or services, the platform operator must apply the highest applicable tax rates, including:

• 5% VAT, and

• 5% PIT for non-resident individuals; 2% PIT for resident individuals.

3. Tax Declaration and Payment Timeline

Platform operators including those managing social networks, mobile applications, websites, etc. that support transaction connection or payment, are required to declare the withheld taxes on a monthly basis, and to withhold tax at the time of successful transaction confirmation and accepted payment.

For e-commerce platforms without payment functionality, households and individuals are responsible for self-declaring and paying taxes in accordance with applicable regulations.

4. Tax Refunds for Households and Individuals

Decree 117 provides detailed guidance on tax refund procedures for business households and individuals where tax has been withheld and remitted by platform operators or where the taxpayer has declared and paid tax directly, but annual turnover does not exceed the taxable threshold.

In such cases, the business household or individual may file a written request for tax refund to the local tax authority at their place of residence (current residence/temporary residence/permanent residence).

Effective Date: Decree 117 shall come into force on 01 July 2025.