The rapid development of information technology and digital platforms such as Facebook, TikTok, Shopee, and Lazada has created a completely new business environment — e-commerce and social media business.
According to the Ministry of Industry and Trade, Vietnam currently has tens of millions of social media users, among whom millions of individuals are conducting online sales, livestreaming, advertising, and providing digital services.
However, alongside this vibrant growth, tax management for online business individuals remains challenging — particularly in determining income, declaring and paying taxes, and monitoring transactions that occur outside traditional business models.
1. Legal Framework
Currently, tax management for individuals doing business on social media is governed by various legal instruments, including:
- Law on Tax Administration No. 38/2019/QH14;
- Law on Value-Added Tax (Law No. 48/2024/QH15, as amended);
- Law on Personal Income Tax No. 04/2007/QH12 (as amended);
- Decree No. 126/2020/NĐ-CP detailing the Law on Tax Administration;
- Circular No. 40/2021/TT-BTC guiding tax obligations for business households and individuals;
- Circular No. 80/2021/TT-BTC guiding implementation of the Law on Tax Administration;
- Decree No. 91/2022/NĐ-CP on administrative penalties in the field of taxation.
In addition, the Ministry of Finance and the General Department of Taxation have issued several official dispatches guiding tax administration for individuals and organizations engaged in e-commerce.
2. Characteristics of Social Media Business
Business activities on platforms such as Facebook, TikTok, Shopee, and others exhibit several distinctive features:
- No fixed business location — operations occur entirely in a virtual environment;
- Absence of traditional invoices or paper documentation — payments are often made through e-wallets or personal bank accounts;
- Difficulty in monitoring revenue, particularly for small-scale or informal sellers;
- Many individuals are not formally registered as business entities;
- Advertising and sales are often intertwined, making it difficult to distinguish between an “influencer” and a “business operator.”
These characteristics make tax declaration, collection, and management especially challenging for tax authorities.
3. Tax Obligations for Online Business Individuals
3.1. Taxpayers
Under Article 3 of Circular No. 40/2021/TT-BTC, individual business operators include those engaged in e-commerce or business via social media or digital platforms.
Therefore, anyone selling goods or services on Facebook, TikTok, Shopee, Zalo, YouTube, Google, etc. is subject to declaration and payment of taxes as individual businesspersons.
3.2. Applicable Taxes
Individuals conducting online business (without establishing a company) are generally required to pay two main taxes:
- Value-Added Tax (VAT): Calculated based on taxable revenue — 1% for goods and 5% for services.
- Personal Income Tax (PIT): Calculated based on taxable revenue — ranging from 0.5% to 2%, depending on the business sector.
According to Article 9 of Circular No. 40/2021/TT-BTC, individuals with annual revenue exceeding VND 100 million must declare and pay both VAT and PIT.
3.3. Tax Declaration and Payment
Individuals may fulfill their tax obligations through:
- (1) Direct declaration with the local tax authority; or
- (2) Through intermediary platforms (such as Shopee, TikTok Shop, Lazada), which are responsible for withholding and remitting taxes on behalf of sellers under Article 15 of Circular No. 40/2021/TT-BTC.
4. Current Tax Administration Measures
To strengthen tax management over social media business activities, tax authorities have implemented several key measures:
(a) Data integration with e-commerce platforms:
Platforms such as Shopee, Lazada, and Tiki are required to periodically provide seller information (tax identification numbers, revenue, and payment accounts) to tax authorities.
(b) Coordination with banks and payment intermediaries:
The tax authority cross-checks bank transactions and e-wallet activity to determine income derived from online business.
(c) Implementation of the eTax Mobile system:
This allows individuals to declare, pay, and track tax obligations via mobile devices, reducing administrative procedures.
(d) Education and voluntary compliance:
Tax authorities encourage online sellers to register and comply voluntarily, thereby avoiding penalties.
5. Practical Challenges
- Difficulty in determining actual revenue due to multiple payment channels (bank transfer, cash-on-delivery, e-wallets);
- Lack of business registration among individuals, making it hard for tax authorities to obtain information;
- Continued occurrence of tax evasion through multiple accounts and underreporting;
- Absence of cross-border tax control mechanisms for income from foreign platforms (e.g., YouTube, TikTok, Meta);
- Limited technological capacity to automate tax monitoring in line with the growth of e-commerce.
6. Tax Penalties
According to Decree No. 125/2020/NĐ-CP and Decree No. 91/2022/NĐ-CP, tax violations are subject to the following penalties:
- Failure to register or declare taxes: Fine ranging from VND 1 million to VND 3 million per individual.
- False declaration, underreporting, or tax evasion: Fine of 1 to 3 times the amount of tax evaded.
- Late payment of taxes: Subject to a 0.03% daily interest on the unpaid amount.
In severe cases, tax evasion may constitute a criminal offense under Article 200 of the 2015 Penal Code (amended 2017), punishable by fines up to VND 4.5 billion or imprisonment of up to 7 years.
7. Recommendations for Legal Reform
- Establish a mandatory data-sharing mechanism among tax authorities, banks, e-commerce platforms, and social media providers;
- Issue specific guidelines for “social media business activities,” which differ from conventional e-commerce;
- Apply artificial intelligence (AI) for transaction monitoring and income analytics;
- Expand tax education and e-tax training programs for small and individual online sellers;
- Develop a cross-border tax framework for cooperation and data exchange with foreign digital platforms.
8. Conclusion
Tax management for individuals doing business on social media is an inevitable trend in the digital era.
Vietnamese law has made significant progress — particularly with Circular No. 40/2021/TT-BTC and the implementation of the electronic tax management system.
Nevertheless, ensuring accurate, fair, and sufficient tax collection remains a major challenge.
To build a transparent, equitable, and sustainable digital economy, Vietnam must continue to modernize its legal framework, upgrade digital tax infrastructure, and foster a culture of voluntary tax compliance among online business individuals.
📞 CONTACT LEGAL CONSULTANT:
TLA Law is a leading law firm with a team of highly experienced lawyers specializing in criminal, civil, corporate, marriage and family law, and more. We are committed to providing comprehensive legal support and answering all your legal questions. If you have any further questions, please do not hesitate to contact us.
1. Lawyer Vu Thi Phuong Thanh, Ha Noi Bar Association
Email: vtpthanh@tlalaw.vn
2. Lawyer Tran My Le, Ha Noi Bar Association
Email: tmle@tlalaw.vn
Khuong Ngoc Lan