Taxmen cometh online in South-east Asia
WITH the Vietnamese New Year, Tet, around the corner, Ms Vuong Thi Minh Thu logs on to her Facebook account and uploads tantalising shots of gio thu, a rich, crunchy sausage made with parts of a pig's head.
"My mum's gio thu is wrapped with dong leaves grown in our backyard, fastened by bamboo strips. They look very retro and adorable... Price 250,000 dong (S$14.50) per kg," she writes.
When orders are placed, the 33-year-old advertising company director delivers them around Ho Chi Minh City on her motorcycle. Apart from gio thu, she also sells other local specialities like banana and coconut candy and shrimp sauce as a sideline.
"When I want to attract more customers for my seasonal products, I will pay for a Facebook advertisement," she tells The Straits Times.
Transactions like hers are coming under scrutiny from taxmen around South-east Asia as rising numbers of people go online to buy goods and services.
A recent Credit Suisse report launched last month predicted that the growth of electronic retailing in Asean will outpace that of offline sales by six to 10 times over the next few years. The Internet economy's share of South-east Asia's gross domestic product is expected to grow from 2 per cent last year to 6 per cent - or US$200 billion - in 2025, according to a study by Google and Temasek.
Tax authorities in Thailand, Vietnam, Indonesia, Malaysia and Singapore are mulling over legal changes to let them capture online transactions that range from sales over social networking platforms to advertisements on Facebook and Google pages to car journeys that are booked and paid for via ride-hailing applications. At the heart of discussions is how corporate income tax, personal income tax and value added tax (VAT) should be levied on sales that are typically conducted on platforms or by firms based offshore.
Taxing e-commerce in region
INDONESIA
When: Government aims to issue rules by middle of this year. Proposals:
• Ride-hailing firms to be locally incorporated and subject to existing corporate income tax.
• Duty on imported digital items like e-books.
THAILAND
When: Public hearing until Friday for the second draft of proposed legislative amendments. Proposals:
• Foreign firm providing services through electronic media may be subject to value added tax if services are consumed in Thailand and income earned from those services exceeds 1.8 million baht (S$75,400).
• Entities will have to pay income tax if they have created a Thai Internet domain, created a payment system in baht or require money transfer from Thailand.
MALAYSIA
When: Legal amendment has not been tabled. Proposals:
• Goods and Services Tax Act to be amended to cover foreign sellers or foreign e-commerce operators.
VIETNAM
When: Draft law expected to be sent to the National Assembly next year. Proposals:
• Cross-border payments to be made through domestic gateways via the National Payment Corporation of Vietnam.
• Foreign e-commerce firms must have local representative office.
• Individuals retailing on electronic platforms to be scrutinised.
PHILIPPINES
When: Taxes on online transactions since 2016. Provisions:
• 12 per cent value added tax on online sales worth more than 1.92 million pesos (S$49,000) a year.
• Transactions amounting to less than the threshold are taxed at 3 per cent of monthly revenue.
• Personal income and other sales taxes apply.