1. Introduction

In the digital economy era, cross-border technology enterprises such as online advertising platforms, social media networks, digital applications, and e-commerce marketplaces are playing an increasingly significant role in the global economy. In Vietnam, consumers and businesses widely use digital services provided by foreign enterprises, including online advertising, cloud storage, digital content, and e-commerce intermediary services.

However, unlike traditional business models, many cross-border technology enterprises do not maintain headquarters, branches, or permanent establishments in Vietnam, yet still generate substantial revenue from the Vietnamese market. This raises critical issues regarding tax administration because, without an effective regulatory mechanism, it may result in tax revenue losses and create inequality between domestic and foreign enterprises.

In this context, Vietnam has gradually improved its legal framework governing taxation of cross-border technology enterprises through the Law on Tax Administration, corporate income tax regulations, value-added tax regulations, and legal instruments governing e-commerce management. Research on taxation mechanisms applicable to cross-border technology enterprises is of significant theoretical and practical importance in the current digital transformation process.

2. Legal Framework Governing Taxation of Cross-Border Technology Enterprises

Currently, the legal framework governing taxation of cross-border technology enterprises in Vietnam includes:

• Law on Tax Administration 2019;
• Law on Value-Added Tax;
• Corporate Income Tax Law 2025;
• Cybersecurity Law 2025;
• Decrees on tax administration for e-commerce activities and digital platforms.

Under current Vietnamese tax law, foreign enterprises deriving income from business activities conducted in Vietnam remain subject to taxation regardless of whether they have a permanent establishment in Vietnam.

In particular, the Corporate Income Tax Law 2025 reaffirms the principle that foreign enterprises generating income in Vietnam are obligated to fulfill tax liabilities in accordance with Vietnamese law.

3. What Are Cross-Border Technology Enterprises?

Cross-border technology enterprises are businesses providing digital services to users in Vietnam through online networks while maintaining headquarters or servers abroad.

Common business activities include:

• online advertising;
• social media services;
• digital video platforms;
• cloud computing services;
• mobile applications;
• cross-border e-commerce;
• provision of digital content and online games.

The distinctive characteristics of these enterprises include:

• absence of physical presence in Vietnam;
• transactions conducted entirely in the digital environment;
• payment flows transferred through multiple jurisdictions.

These characteristics make the determination of taxable revenue, source of income, and tax obligations significantly more complex than for traditional enterprises.

4. Taxation Mechanisms Applicable to Cross-Border Technology Enterprises

4.1. Value-Added Tax (VAT)

One of the key taxes applicable to cross-border technology enterprises is value-added tax (VAT).

Under Vietnamese law, services supplied by foreign enterprises to organizations and individuals in Vietnam are subject to VAT if such services are consumed within Vietnam.

This means that:

• foreign enterprises providing digital advertising, digital services, or online platforms to Vietnamese customers are still required to declare and pay VAT;
• tax obligations may be fulfilled either directly or through withholding entities in Vietnam.

In practice, the Vietnamese tax authority has established an electronic portal specifically designed for foreign suppliers to facilitate online tax declaration and payment.

4.2. Corporate Income Tax (CIT)

In addition to VAT, cross-border technology enterprises are also required to fulfill corporate income tax obligations with respect to income generated in Vietnam.

Pursuant to the Corporate Income Tax Law 2025, foreign enterprises, regardless of whether they maintain a permanent establishment in Vietnam, are subject to taxation if they derive income sourced from Vietnam.

Currently, taxation of cross-border enterprises is mainly implemented through:

• percentage-based taxation calculated on gross revenue; or
• the foreign contractor tax mechanism.

This approach is considered appropriate due to the difficulty in determining the actual operational costs of foreign enterprises.

4.3. Tax Withholding and Declaration Mechanisms

In many cases, Vietnamese law requires:

• commercial banks;
• payment intermediary service providers;
• enterprises operating in Vietnam

to cooperate in tax withholding and provide information for tax administration purposes.

For example:

• when a Vietnamese enterprise makes advertising payments to a foreign digital platform, taxes may be withheld before the payment is remitted overseas;
• banks are responsible for cooperating in providing transaction data for tax administration purposes.

This mechanism plays an important role in minimizing tax revenue losses in the digital economy.

4.4. Tax Administration Through Digital Data

In the context of digital transformation, tax authorities are increasingly applying technological measures to manage revenue generated on digital platforms, including:

• analysis of electronic transaction data;
• monitoring cross-border financial flows;
• integrating data systems with banks and e-commerce platforms;
• utilization of Big Data technologies.

Digital data-based tax administration enhances the ability to supervise cross-border business activities effectively.

5. Practical Challenges in Tax Collection

5.1. Absence of Commercial Presence in Vietnam

The greatest challenge is that many cross-border technology enterprises:

• do not establish headquarters in Vietnam;
• lack legal representatives in Vietnam;
• do not store data within Vietnamese territory.

This creates difficulties for:

• tax inspections;
• tax enforcement measures;
• handling legal violations.

5.2. Difficulties in Determining Actual Revenue

Because digital transactions occur across borders and through multiple intermediary platforms, determining:

• actual revenue;
• operational costs;
• profits generated in Vietnam

is highly complex.

Many enterprises also employ global tax optimization structures to shift profits to jurisdictions with lower tax rates.

5.3. Limitations in International Cooperation

Tax collection from cross-border technology enterprises heavily depends on:

• international information exchange;
• transnational tax cooperation;
• anti-transfer pricing and anti-base erosion mechanisms.

Meanwhile, the international legal framework governing digital taxation is still evolving at the global level.

6. International Trends in Taxation of Digital Enterprises

Many countries have adopted:

• Digital Services Tax (DST);
• destination-based taxation mechanisms;
• regulations preventing cross-border profit shifting.

The Organisation for Economic Co-operation and Development (OECD) has also promoted the Global Minimum Tax initiative to prevent multinational enterprises from shifting profits to “tax havens.”

Vietnam is gradually aligning with these international trends through ongoing reforms in tax legislation and digital data management.

7. Recommendations for Improving the Legal Framework

First, Improving the Digital Taxation Mechanism

Vietnam should establish a separate taxation mechanism specifically applicable to enterprises operating on digital platforms in order to reflect the characteristics of the modern digital economy.

Second, Strengthening Payment Data Management

Data connectivity should be enhanced among:

• tax authorities;
• banks;
• e-commerce platforms;
• payment intermediary service providers.

Third, Expanding International Cooperation

Vietnam should actively promote:

• tax information exchange agreements;
• cooperation against transfer pricing practices;
• participation in global digital taxation frameworks.

Fourth, Improving Violation Handling Mechanisms

Additional mechanisms should be introduced regarding:

• cross-border tax enforcement;
• sanctions against enterprises failing to declare taxes;
• compulsory compliance of digital platforms with tax obligations.

8. Conclusion

Taxation of cross-border technology enterprises constitutes one of the major challenges of tax law in the digital economy era. Due to the absence of physical presence and the nature of online business operations, cross-border technology enterprises require flexible, modern, and internationally integrated tax administration mechanisms.

Vietnamese law has gradually established a legal foundation for managing and collecting taxes from cross-border technology enterprises through the Law on Tax Administration, the Corporate Income Tax Law 2025, and regulations relating to e-commerce and digital data management. Nevertheless, given the rapid development of the global digital economy, Vietnam must continue improving its legal framework, strengthening international cooperation, and modernizing tax administration in order to ensure fairness, prevent tax revenue losses, and safeguard national fiscal sovereignty.

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Khuong Ngoc Lan