Decree No. 117/2025/ND-CP on tax administration for e-commerce and digital platform-based business activities of household businesses and individual businesses

The Government has just issued Decree No. 117/2025/ND-CP on tax administration for e-commerce and digital platform-based business activities of household businesses and individual businesses. The Decree officially takes effect from July 1, 2025 (“Decree 117”). The Decree is considered an important step in tightening tax administration for the increasingly popular type of online business, and at the same time, ensuring fairness in tax obligations between traditional business entities and businesses on digital platforms. To help readers promptly grasp important changes and comply with the law, we would like to send to you the main details of this Decree.

Basic contents of Decree 117:

1. Regulated entities of Decree 117

Under Article 2 of Decree 117, the following subjects apply:

a. E-commerce platform operators, payment-enabled digital platform operators and other organizations performing digital business activities that have the responsibility to deduct and pay tax on behalf of sellers.
b. Resident sellers and non-resident individuals that do business on e-commerce or digital platforms.
c. Tax authorities and relevant organizations and individuals.

2. The deduction and payment of tax on behalf of business activities on e-commerce platforms and digital platforms according to Decree 117

Pursuant to Article 4 of Decree 117 on tax deduction and payment on behalf of the company, Article 4 directly stipulates (1) the responsibility to deduct and pay value-added tax (VAT) on behalf of organizations managing e-commerce platforms and (2) the responsibility to deduct and pay personal income tax on behalf of organizations managing e-commerce platforms e-commerce, specifically as follows:

a. Responsibility to deduct and pay value-added tax (VAT) on behalf

• Organizations managing e-commerce platforms – including domestic and foreign organizations, specificially: The owner directly operating the e-commerce platform, or the person authorized to manage the e-commerce platform will be subject to deduction and payment of value-added tax (VAT) on behalf of households and individuals engaged in business activities on the platform.

• Conditions for incurring tax obligations: When there is a transaction of providing goods and services through an e-commerce platform and this transaction generates revenue in Vietnam, the platform management organization must deduct and pay VAT on behalf of the business household/individual.

b. Responsibility to deduct and pay personal income tax (PIT) on behalf

Organizations managing e-commerce platforms (both domestic and foreign, as mentioned above) must also deduct and pay personal income tax (PIT) for these subjects:

• For individuals residing in Vietnam: Organizations managing e-commerce platforms must deduct and remit PIT on behalf of resident individuals who conduct business activities through the platform. This means whether the transaction takes place in the country or abroad, if the seller is a resident individual, the platform management organization must still deduct and pay PIT on their behalf.

• For non-resident individuals in Vietnam: The e-commerce platform management organization must also take the responsibility to deduct and remit PIT on behalf of non-resident individuals who sell goods and provide services through the platform, however, this responsibility only applies to transactions that generate revenue in Vietnam. This means if the seller is a non-resident individual and has revenue generated in Vietnam, the platform organization must also deduct and pay PIT on behalf of that individual as prescribed.

Thus, the provisions of Article 4 of Decree 117 have clarified the legal responsibility of organizations managing e-commerce platforms – both domestic and foreign – in deducting and paying VAT and PIT on behalf of households and individuals doing business on the platform. The application of the tax deduction and payment mechanism not only helps tax authorities better control revenues arising from online business activities, but also reduces the burden of tax declaration and payment directly for households and individuals.

3. Time to deduct and determine the tax amount to be deducted for business activities on e-commerce platforms and digital platforms according to Decree 117

Pursuant to Article 5 of Decree 117 stipulating the time of deduction, determining the tax amount to be deducted, specifically as follows:

a. Time to make tax deduction

According to the provisions of Decree 117, organizations that manage e-commerce platforms (including domestic and foreign) will have to make tax deductions right at the time of confirming successful transactions and accepting payments.

In other words, as soon as a household or individual successfully sells goods or provides services on the platform and is confirmed for payment, the platform will automatically deduct VAT and/or PIT before transferring the payment to the seller.

b. The method to determine the amount of tax to be deducted

The value-added tax amount and personal income tax amount subject to deduction are determined as a percentage (%) of the turnover of each transaction of sale of goods or provision of services, specifically as follows:

• Value Added Tax (VAT): The percentage of VAT shall comply with the provisions of the Law on Value Added Tax as follows:

– Goods: the VAT deduction rate on sales is 1%;
– Services: the VAT deduction rate on sales is 5%;
– Transportation and services associated with goods: the VAT deduction rate on turnover is 3%.

• Personal Income Tax (PIT): Applied according to the PIT Law and classified according to the seller’s residence status as follows:

– For resident individuals: Goods: 0.5%; services: 2%; transportation and services associated with goods: 1.5%.
– For non-resident individuals: Goods: 1%; services: 5%; transportation and services associated with goods: 2%.

• If the transaction type cannot be determined

In case organizations managing e-commerce platforms subject to deduction or payment cannot identify transactions generating revenue from e-commerce platforms as goods, services or types of services, the determination of the tax amount to be deducted shall be carried out according to the highest percentage.

• Turnover as a basis for tax calculation

Turnover for calculating the deductible tax amount is the entire amount of sales or provision of services that households and individuals are entitled to, collected by the organization managing the e-commerce platform on behalf of customers who buy it.

Thus, the provisions of Article 5 of Decree 117 have clearly established that the time of tax deduction is as soon as the transaction is successfully confirmed and payment is accepted, ensuring timely and transparent tax collection.

4. Declare and pay the deducted tax amount for business activities on e-commerce platforms and digital platforms according to Decree 117

Article 6 of Decree 117 stipulates the method of declaration and payment of the deducted tax amount as follows:

a. Regarding deductible tax declaration: Organizations managing e-commerce platforms (including domestic and foreign) are responsible for declaring the deducted tax amount every month.

b. Regarding the handling of canceled or returned transactions:

In case the transaction is canceled or goods/services are returned, leading to the household or individual no longer having actual revenue, the platform organization will be allowed to adjust the deducted and paid tax amount as follows: The deducted tax amount of the canceled or returned transaction will be offset against the deductible tax amount of other transactions in the declaration period.

c. Determine the amount of tax paid on behalf:

The tax amount that the platform organization must pay on behalf of households and individuals in the declaration period is calculated by the total tax of successful sales and service provision transactions minus the total tax of canceled or returned goods transactions (if any).

Thus, the provisions of Article 6 of Decree 117/2025/ND-CP have established a mechanism for tax declaration and adjustment for organizations managing e-commerce platforms.

5. Responsibilities of households and individuals conducting business activities on e-commerce platforms according to Decree 117

a. Responsibilities of households and individuals to declare and pay several specific taxes by themselves

Decree 117 has stipulated that households and residing individuals having business activities on e-commerce platforms are responsible for declaring and paying excise tax, environmental protection tax, natural resource tax and other revenues payable to the state budget collected by the managing tax authorities by the tax law, law on tax administration and other relevant laws.

b. Responsibilities of households and individuals providing identification information

Business households and individuals are obliged to provide full and accurate identification information to the platform management organization to serve the tax declaration and payment on their behalf. Specificially:

• Vietnamese citizens: provide tax identification numbers or personal identification numbers;
• Foreigners: provide passport numbers or identification information issued by foreign competent agencies;
• At the same time, provide mandatory information in by the provisions of the e-commerce law (e.g. name, address, payment method, etc.).

c. Exemption from tax declaration and payment if deducted or paid on behalf

Households and individuals that have been deducted, declared and paid on behalf of value-added tax and personal income tax amounts by organizations managing e-commerce platforms as prescribed in this Decree are not required to declare and pay value-added tax and personal income tax for business activities on e-commerce platforms that have deducted taxes on their behalf.

Thus, Decree 117 has clearly defined the tax responsibilities of households and individuals doing business on e-commerce platforms.

Decree 117 marks an important step in completing the legal corridor to effectively manage business activities on e-commerce and digital platforms, especially for households and individuals doing business. We hope the above article is helpful to you.

Best regards.