On September 29, 2021, the Ministry of Finance of Vietnam issued Circular 80/2021/TT-BTC providing guidance for the implementation of the Tax Administration Law and Decree 126/2020/ND-CP of the Government. These two documents came into effect on January 1, 2022.
TikTok ensures compliance with tax obligations in the Vietnamese market
With the aim of complying with local tax updates and rationalizing its operations in the Vietnamese market, TikTok Pte. Ltd. ("TikTok") has registered for taxes in Vietnam and assumes responsibility for tax declaration for providing TikTok advertising services to all customers whose payment country for TikTok Advertising Account is set to Vietnam.
1. Before January 1, 2024
- If your organization has registered for tax in Vietnam, please provide your tax identification number (TIN) to TikTok. We will not charge Vietnamese tax for transactions made by you after we verify and approve your TIN. You will be solely responsible for paying, reporting, and remitting Value Added Tax (VAT) as well as Corporate Income Tax (CIT) in Vietnam when purchasing goods.
- If your organization has not registered for tax in Vietnam, TikTok will be responsible for collecting 5% VAT and 5% CIT from you and remitting it to the Vietnam Tax Department.
- After January 1, 2024
TikTok directly collects 5% VAT and is responsible for paying CIT, VAT to the Vietnam Tax Authority. Customers are responsible for paying an additional 5% VAT and are not responsible for declaring or paying taxes on behalf of TikTok PTE.
TikTok has sent an official and latest notification to all customers regarding the tax, fees, and payment when using advertising services on the TikTok Shop platform.
How much is VAT on TikTok?
In order to comply with Circular 80/2021/TT-BTC, starting from January 1, 2024, all purchases made by organizations/individuals in Vietnam will be subject to a 5% Value Added Tax (VAT) on the remaining balance.
Currently, TikTok directly charges a 5% VAT fee and fulfills tax obligations to the Vietnam Tax Authority. This VAT expense is not deductible and is considered as a legitimate expense and deductible when calculating CIT.
Below is an example of how VAT is calculated with the standard tax rate of 5%, based on the tax base being the revenue of TikTok obtained from purchases subject to tax in the Vietnam region:
Note:
- If the business is an organization that has registered for tax in Vietnam, TikTok encourages the business to access the Ad Manager Account Setup section to set the Tax status to "Registered VAT Business" and enter a valid Tax ID into the Tax ID field. The provided Tax ID will be added to the business's invoices. Please note that the Tax ID format must be in 10 or 13 digits, and the Tax ID can be verified on the National Business Registration Portal of Vietnam. The business will be fully responsible for ensuring that the information is accurate and complete. TikTok will not accept invoice reissuance in cases where the information provided by the business is inaccurate.
Updating complete information and tax status on the TikTok Shop platform will greatly support businesses/brands in issuing sales invoices, VAT invoices on the e-commerce platform when settling taxes.
- If you are not an organization/individual registered for tax in Vietnam, then you do not need to take any further action..
What do businesses, organizations, and brands on TikTok Shop need to do?
"Invoices are one of the crucial documents for organizations and individuals to deduct input costs. Through review and management processes, most service-consuming organizations generally comply with the requirement for the seller to issue invoices. Currently, tax authorities have also implemented electronic invoices nationwide, facilitating any organization or individual to do so," said Mr. Nguyen Bang Thang, Director of the Large Enterprise Tax Department, General Department of Taxation.
The failure to issue invoices only occurs among small individual businesses. However, for registered enterprises using the revenue-cost method for tax submission, it is clear that businesses must issue full invoices to deduct input value-added tax and record expenses for corporate income tax purposes.
Using invoice issuance software to support sales invoices and VAT invoices on e-commerce platforms
According to tax regulations, businesses on e-commerce platforms must issue invoices for each successfully delivered order. This requirement often consumes a significant amount of time for the accounting department and businesses to process order data from the platform.
With the large volume of transactions made by businesses/organizations each month, the state's tax regulations for e-commerce entities are becoming increasingly stringent. Tracking orders, invoices, and issuing sales invoices to ensure high accuracy and optimize time and operation efficiency for the accounting department is a challenge for many businesses.
Through our work and collaboration with over 200 businesses on e-commerce platforms, we understand the issues and needs of our customers. UpBase SMEs software provides features to support quick and accurate sales invoice issuance, helping businesses and accounting departments save a significant amount of time and effort.
- Automatic synchronization of order data from the platform
- Extraction of detailed information such as unit price, total amount, discounts, and taxes on each order
- Elimination of manual extraction and calculation steps for orders
- Direct generation and printing of invoices within the software
- Integration of API with accounting software to directly export invoices
Visit UpBase's comprehensive eCommerce community website!
