Selling Online in Vietnam? New Tax Withholding Rules for E-Commerce

What does Decree 117 change for e-commerce sellers in Vietnam?

Decree 117 shifts the main tax compliance burden for online sales from individual sellers to the e-commerce platforms that process their transactions. Platforms must withhold VAT and PIT from seller revenue and pay these amounts directly to the tax authorities, at specified rates such as 1.5% for trading goods.

This is a significant policy move in Vietnam's digital economy. It is issued under the Law on Tax Administration 2019 and aligns with the General Department of Taxation's strategy to control revenue flows via platforms instead of chasing thousands of micro sellers.

Key changes at a glance

• New withholding agent: Platforms (marketplaces, social commerce platforms, possibly large website operators) become "withholding agents" for VAT and PIT.
• Scope: Primarily individuals and household businesses selling through platforms; enterprises (companies) still follow their normal tax regime but platforms may need to report their data.
• Automatic deduction: The platform deducts tax from each payout or settlement to the seller, then remits it to the tax office.
• Reporting obligations: Platforms must submit detailed transaction reports to the tax authority, including seller IDs and revenue.
• Effective timing: Decree 117 is scheduled to take effect from July 2025, but platforms need months of technical preparation before that date.

Relevant authorities and legal basis

• Governing law: Law on Tax Administration 2019 and its guiding decrees.
• Implementing decree: Decree 117 on tax management for e-commerce platforms (effective July 2025).
• Authorities involved:
  • General Department of Taxation (GDT) - under the Ministry of Finance.
  • Provincial/municipal Tax Departments - manage local sellers and household businesses.
  • Ministry of Industry and Trade - regulates e-commerce activities and platforms under Decree 52/2013/ND-CP and its amendments.

Why are e-commerce platforms responsible for declaring VAT and PIT instead of sellers?

Platforms are responsible because they control the transaction data and payment flows, which makes tax withholding and monitoring much easier than dealing with many small sellers. Decree 117 treats platforms as withholding agents who must collect and pay taxes on behalf of sellers, similar to how employers withhold PIT on salaries.

Main policy reasons

• Data centralization: Platforms see the full picture: order value, discounts, shipping fees, COD status, and buyer details. Individual household businesses often under-report or keep no proper books.
• Payment control: For non-COD orders, money passes through platforms or their payment partners. That gives the tax authority a clear point of control for deductions.
• Administrative efficiency: The tax office cannot effectively audit hundreds of thousands of micro-sellers. Auditing a few dozen large platforms is far more manageable.
• Reducing tax evasion: Previously, many online sellers did not register as household businesses and paid no VAT or PIT. With platform withholding, tax leakage reduces sharply.
• International practice: Many countries now treat digital platforms as tax withholding or collection agents (for example, for VAT/GST on online marketplaces). Vietnam is aligning with this trend.

Legal concept: "withholding agent"

• Under the Law on Tax Administration, organizations that pay income to individuals can be required to withhold PIT or other taxes.
• Decree 117 extends this logic to platforms, by treating the amounts payable to sellers as income on which VAT and PIT must be withheld.
• Once tax is withheld and paid by the platform, the seller is generally considered to have fulfilled that part of their VAT/PIT obligation on the withheld turnover.

What tax rates apply to online sellers under Decree 117?

For traders of goods on platforms, the standard combined withholding rate is 1.5% of gross revenue: 1% VAT and 0.5% PIT. Different rates may apply for services, digital content or other sectors, but 1.5% is the key figure for most small online shops selling physical goods.

Indicative tax rates for platform withholding

Exact rates and scope will be in Decree 117 and any guiding circulars, but based on current practice for business households and individuals:

*Service and digital content rates are indicative based on current tax policy for business individuals; platforms must check the final Decree 117 text and guiding documents.

How the 1.5% for goods is calculated

• Tax base: Usually the gross revenue from sales, including VAT, before platform commissions but after discounts that reduce the actual amount collected from the buyer.
• No deduction for costs: The 1.5% is a presumptive rate. It does not allow deduction for purchase cost of goods, rent, salaries or advertising expenses.
• Per transaction or per period: In practice, platforms will calculate the tax on aggregated revenue per seller per settlement period (for example, daily or weekly payout cycles) and show it on seller statements.

Simple revenue examples for goods

• Monthly gross sales 20,000,000 VND: Tax = 1.5% x 20,000,000 = 300,000 VND (VAT 200,000 + PIT 100,000).
• Monthly gross sales 100,000,000 VND: Tax = 1.5% x 100,000,000 = 1,500,000 VND (VAT 1,000,000 + PIT 500,000).
• Monthly gross sales 1,000,000,000 VND: Tax = 1.5% x 1,000,000,000 = 15,000,000 VND (VAT 10,000,000 + PIT 5,000,000).

How will withholding work in practice on Shopee, Lazada and TikTok Shop?

Platforms will calculate the tax on each seller's taxable revenue, withhold that amount from the payout, and then transfer the net balance to the seller. They must then declare and pay the withheld VAT and PIT to the tax authority within the statutory deadline, together with detailed transaction reports.

Typical operational flow

1. Order completion: Buyer places an order and the platform confirms delivery and completion (including COD collection if applicable).
2. Revenue calculation: Platform determines the seller's gross revenue for that order (after discounts but before commissions and service fees).
3. Tax computation: Platform multiplies the revenue by the relevant withholding rate (for example, 1.5% for trading goods).
4. Settlement to seller: When making a payout (daily/weekly), the platform deducts:
   • Platform commissions and service fees.
   • Advertising fees and other charges.
   • Withheld VAT and PIT under Decree 117.
5. Tax remittance: Platform pays the total withheld taxes to the tax authority, following monthly or quarterly withholding schedules under the Law on Tax Administration.
6. Reporting: Platform submits a summary of withheld taxes by seller, plus electronic transaction details as required.

Seller statements and transparency

• Platforms should show a clear tax line on the seller dashboard or settlement statement: revenue, tax rate, amount of VAT, amount of PIT, and net payout.
• Many sellers will use these statements as proof that VAT and PIT have already been paid on their platform revenue.
• For large or registered enterprises, this data will support reconciliation with their own tax returns.

Interaction with existing household business regimes

• Household businesses that previously paid a fixed presumptive tax may see that regime replaced, for platform revenue, by real-time withholding.
• Sellers with mixed revenue (part on platforms, part offline) may have:
  • Tax withheld on platform revenue; and
  • Self-declaration for offline sales at local tax offices.
• Tax authorities will increasingly cross-check offline declarations with platform data to identify under-reported turnover.

How are Cash on Delivery (COD) orders taxed under Decree 117?

COD orders remain fully taxable; the fact that the buyer pays cash to the delivery company does not remove the platform's withholding duty. Platforms must include COD revenue in the seller's taxable turnover and withhold VAT and PIT, often offsetting these taxes against future non-COD payouts.

How COD flows work with tax

1. Buyer pays COD: Logistics provider collects cash from the buyer at delivery.
2. Reconciliation: Carrier reports collected amounts to the platform and/or seller, and transfers funds according to their contract.
3. Platform revenue record: The platform still records the order value as revenue for the seller, even though the platform may not directly handle the cash.
4. Tax calculation: Platform includes this COD revenue when calculating the 1.5% withholding tax.
5. Tax collection from seller:
   • If the platform also controls COD funds, it can withhold tax before paying the seller.
   • If the carrier pays the seller directly, the platform may:
     • Deduct the tax from future non-COD payouts; or
     • Require the seller to top up a tax account/wallet on the platform.

Commercial impact on COD-heavy sellers

• Sellers that rely heavily on COD may see:
  • More frequent negative balances or offsets in their platform accounts when taxes are back-charged on completed COD orders.
  • Pressure to reduce COD usage in favor of prepaid orders to simplify cash flow.
• Platforms may adjust their COD policies, for example:
  • Imposing limits on COD for unverified sellers.
  • Requiring deposits or security balances to cover expected tax liabilities.

Practical tips for COD sellers

• Track COD and non-COD revenue separately inside your own bookkeeping.
• Monitor platform statements to ensure COD revenue is correctly captured and taxes are calculated only on successful deliveries, not on canceled or returned orders.
• Factor the 1.5% tax into your pricing structure for COD orders, which typically already have higher return/failed-delivery risks.

How are independent Facebook and social media sellers affected?

Independent Facebook, Zalo, livestream and website sellers that do not use a regulated e-commerce platform are not automatically subject to platform withholding. They remain personally responsible for registering their business and declaring VAT and PIT directly with their local tax office, but they may face increased scrutiny as authorities use platform data and payment information to identify undeclared businesses.

Current position for non-platform sellers

• No automatic withholding: If you sell only via Facebook, Zalo, Instagram, personal website or direct messaging, there is usually no platform entity to withhold tax for you.
• Legal obligation unchanged: You still must:
  • Register as a household business or individual business if you meet turnover thresholds set by your local People's Committee and tax office.
  • Declare and pay VAT and PIT based on the presumptive or actual revenue method, as instructed by your tax authority.
• Higher enforcement risk: As tax authorities gain clearer data from big platforms, they can better estimate sector turnover and identify gaps from social media channels.

Possible future extensions

• Vietnam's tax authorities are already working with:
  • Banks and e-wallets (MoMo, ZaloPay, etc.).
  • Delivery companies and logistics providers.
  to obtain transaction data.
• Even if Decree 117 focuses on large e-commerce platforms, future regulations may require:
  • Payment intermediaries to report and possibly withhold tax for high-volume social media sellers.
  • Large social networks with marketplace features to play a similar withholding role.

What Facebook sellers should do now

• Assess your annual revenue. If it is substantial (for example, tens of millions of VND per month or more), assume you are on the tax authority's radar.
• Consider:
  • Registering as a household business at your ward/district, or
  • Incorporating a company if you expect to scale and want cleaner accounting and contracts.
• Keep basic records: order books, bank/e-wallet statements, shipping invoices, and customer lists to justify your figures if audited.

What is the real impact on household businesses and small traders?

Household businesses and small traders will feel the impact through automatic tax deductions from their payouts and increased transparency of their true revenue. Profit margins will narrow slightly unless sellers adjust prices or optimize costs, but many will benefit from simpler compliance and reduced risk of unexpected tax arrears.

Financial impact

• Reduced cash-in-hand: A 1.5% cut directly reduces net receipts. For thin-margin goods, this may be noticeable.
• More predictable tax: Instead of facing a lump-sum tax assessment at year-end, tax is spread out as each sale completes.
• Comparative example:
  • Old model: 100,000,000 VND monthly revenue, but seller under-reports 40,000,000 VND and pays tax only on 60,000,000 VND.
  • New model: platform reports and withholds on the full 100,000,000 VND, so the actual effective tax take increases for previously non-compliant sellers.

Compliance and risk profile

• Lower audit risk for compliant sellers: If your income is mainly from platforms that already withhold tax, the tax authority may focus less on you and more on unregistered sellers.
• Higher detection risk for non-compliant sellers: Sellers mixing platform and off-platform sales will find it harder to hide offline revenue once authorities see their platform turnover.
• Record-keeping expectations: Authorities will expect sellers to maintain at least simple records that reconcile with platform statements.

Strategic responses for small traders

• Revisit your pricing structure to absorb the 1.5% tax without eroding all your margin.
• Negotiate with suppliers to improve purchase prices if your scale has grown.
• Consider moving more sales onto platforms that withhold tax if you want simpler compliance, even if that means paying commissions.
• If your scale justifies it, consider setting up a company to:
  • Deduct input VAT on purchases.
  • Recognize costs and potentially reduce corporate income tax compared to flat presumptive PIT.

What records and reports should platforms and sellers keep?

Platforms must keep detailed, transaction-level data and tax withholding reports, while sellers should retain platform statements, invoices and basic accounting records for at least 10 years. These documents support audits, dispute resolution, and reconciliation between platform withholding and any additional tax obligations.

Platform obligations

• Maintain electronic records of:
  • Each order (date, buyer ID, seller ID, product, value, discounts, shipping).
  • Payment method (prepaid, COD, wallet, bank transfer).
  • Amounts credited to sellers and timing of payouts.
  • Tax withheld per transaction and per seller per period.
• Store data for the minimum period required under the Law on Tax Administration (often 10 years for tax-related documents).
• Provide data to tax authorities electronically on request or via periodic reporting interfaces.

Seller-side documentation

• Download and archive:
  • Monthly settlement reports or invoices from platforms.
  • Tax withholding summaries that break down VAT and PIT.
  • Bank statements matching platform payouts.
• Keep copies of:
  • Purchase invoices from suppliers (for your own profitability analysis and, for companies, VAT deduction).
  • Shipping invoices, COD reconciliation notes and refund records.
• For mixed sales (online and offline), maintain a simple ledger that records daily sales by channel.

Using records to resolve disputes

• If you believe the platform miscalculated tax, you will need:
  • Order-level records from your own systems or exports from the platform.
  • Proof of canceled / returned transactions.
• Disputes with tax authorities (for example, about double taxation or misclassification of activity) will rely heavily on these platform documents.

When should you hire a lawyer or tax expert for Decree 117 issues?

You should hire a lawyer or tax expert if your online revenue is significant, you operate across multiple channels, or you are a platform facing new withholding obligations. Professional advice is valuable whenever tax amounts are large, your structure is complex, or you anticipate audits or disputes.

Typical situations requiring expert help

• You are a platform or marketplace operator in Vietnam:
  • Designing withholding and reporting systems that comply with Decree 117 and the Law on Tax Administration.
  • Drafting and updating seller terms and conditions to allocate tax risks properly.
  • Handling inspections or information requests from the General Department of Taxation.
• You are a high-volume seller:
  • Annual online revenue in the hundreds of millions or billions of VND.
  • Sales on multiple platforms plus Facebook/website channels.
  • Questions about whether to stay as a household business or convert to a company.
• You have cross-border elements:
  • Selling into or out of Vietnam through foreign platforms.
  • Receiving payments from abroad while operating in Vietnam.
• You face enforcement actions:
  • Tax audit notices, requests for back taxes, or penalty assessments.
  • Disputes over whether withheld taxes on platforms fully satisfy your obligations.

What an expert can practically do for you

• Review your contracts with platforms to clarify who bears which tax responsibilities.
• Model different structures (household business vs company) and estimate tax burdens under Decree 117.
• Set up simple internal processes so your staff can reconcile platform reports with your own books.
• Represent you in discussions with the tax office to negotiate payment plans or contest incorrect assessments.

What are the next steps for online sellers and platforms in Vietnam?

Online sellers should map their sales channels, estimate the impact of the 1.5% withholding on margins, and prepare for cleaner record-keeping from now until July 2025. Platforms must accelerate technical, legal and operational preparations to implement withholding, reporting and transparent communication with sellers.

Action plan for small and household sellers

1. List your channels: Identify how much revenue comes from Shopee, Lazada, TikTok Shop, other platforms, and pure social media or offline sales.
2. Run the numbers: Apply the 1.5% rate to your last 3-6 months of platform revenue to see the expected tax amount in VND.
3. Adjust pricing: Decide whether to:
   • Increase prices slightly;
   • Renegotiate supplier terms; or
   • Accept slightly lower margins in exchange for legal certainty.
4. Regularize your status: If unregistered, discuss with your local tax office whether you should register as a household business or establish a company.
5. Set up basic bookkeeping: Even a simple spreadsheet reconciling platform reports, COD returns and expenses will help you manage profitability and handle audits.

Action plan for platforms and marketplace operators

1. Legal review: Work with Vietnamese tax counsel to interpret Decree 117 and identify all obligations and risks.
2. System design: Collaborate between legal, finance and IT teams to:
   • Tag seller types correctly (individual vs enterprise; goods vs services).
   • Apply correct tax rates to each transaction.
   • Generate compliant tax reports and seller statements.
3. Contract updates: Amend seller terms and platform policies to:
   • Inform sellers about withholding.
   • Clarify how COD and refunds affect tax calculation.
   • Allocate liabilities for mis-declared seller information.
4. Pilot and testing: Run test cycles before July 2025, ideally with selected sellers, to ensure accurate withholding and reporting.
5. Seller communication: Publish clear FAQs, examples and dashboards so sellers know:
   • How much tax is being withheld;
   • How it is calculated; and
   • Where they can download supporting documents.

Preparing now for Decree 117 will help both sellers and platforms avoid disruption, maintain trust with customers and authorities, and build more sustainable online businesses in Vietnam's evolving regulatory landscape.