1. Legal Framework Governing Tax Obligations in Online Business Activities
Under Vietnam’s current tax legislation, individuals earning income from livestream sales, affiliate marketing commissions, or dropshipping activities are primarily governed by the following legal instruments:
- The Law on Tax Administration No. 38/2019/QH14 and its implementing regulations.
- The Law on Personal Income Tax No. 04/2007/QH12, as amended and supplemented.
- Circular No. 40/2021/TT-BTC, providing guidance on Value-Added Tax (VAT), Personal Income Tax (PIT), and tax administration applicable to household businesses and individual business operators.
- Decree No. 91/2022/ND-CP, amending and supplementing Decree No. 126/2020/ND-CP, which imposes reporting obligations on e-commerce platform operators to provide information relating to merchants and individual sellers to the tax authorities.
Revenue Threshold for Tax Liability
Pursuant to Clause 2, Article 4 of Circular No. 40/2021/TT-BTC, individuals engaged in business activities with annual revenue of VND 100 million or less are not subject to VAT and PIT.
Where annual revenue exceeds VND 100 million, the individual is required to register, declare, and pay taxes on the entire taxable revenue generated from such business activities.
2. Tax Declaration Obligations by Category of Taxpayer
2.1. KOLs/KOCs and Livestream Hosts Receiving Remuneration or Commissions
KOLs/KOCs and livestream hosts generally derive income from two principal sources.
Scenario 1: Advertising Fees or Service Remuneration Paid by Companies or Marketing Agencies
Nature of Income
Such payments are generally classified as employment income (salary or wages).
Tax Treatment
Pursuant to Article 25 of Circular No. 111/2013/TT-BTC, organizations paying remuneration of VND 2,000,000 or more per payment are required to withhold 10% Personal Income Tax (PIT) at source before making payment to the recipient.
At the end of the tax year, the KOL/KOC is responsible for conducting the annual PIT finalization, whereby the final tax liability is determined according to the progressive tax rates ranging from 5% to 35%.
Scenario 2: Affiliate Marketing Commissions or Livestream Sales Conducted Through a Registered Household Business
Nature of Income
Such income is regarded as business income derived from the provision of advertising or intermediary services.
Applicable Tax Rates
According to Appendix I of Circular No. 40/2021/TT-BTC, tax is calculated as a percentage of gross revenue:
- VAT: 5%
- PIT: 2%
Total Effective Tax Rate: 7% of gross commission or service revenue.
2.2. Individuals Conducting Livestream Sales of Self-Sourced Goods
Where an individual purchases goods for resale, conducts livestream sales, and delivers products directly to customers:
Nature of Income
The activity constitutes the distribution and sale of goods.
Applicable Tax Rates
Pursuant to Appendix I of Circular No. 40/2021/TT-BTC:
- VAT: 1%
- PIT: 0.5%
Total Tax Liability: 1.5% of gross sales revenue, irrespective of whether the business generates a profit or incurs a loss.
2.3. Dropshipping Business Model
Dropshipping refers to a business model under which the seller does not maintain inventory. Upon receiving a customer’s order, the seller forwards the order to a supplier, who ships the goods directly to the customer. The seller earns either a profit margin or an intermediary commission.
Domestic Dropshipping
Where the supplier is located in Vietnam, tax obligations depend on the legal characterization of the transaction.
The taxpayer may be taxed as:
- a provider of intermediary or commercial services (subject to 5% VAT and 2% PIT on commissions or service income); or
- a distributor of goods (subject to a combined 1.5% tax rate) depending on the commercial arrangement and supporting invoices.
Cross-border Dropshipping (Amazon, eBay, Shopify, etc.)
Income received from international platforms and remitted into Vietnamese bank accounts may be subject to Vietnamese PIT applicable to Vietnamese tax residents, including income earned from overseas sources.
The applicable tax rate depends on the legal nature of the transaction and whether the activity is characterized as cross-border service provision or e-commerce. In practice, the effective tax rate generally ranges from 2% to 7% of taxable revenue.
3. Summary of Applicable Tax Rates
| Taxpayer / Business Activity | Nature of Income | VAT | PIT | Total Tax Burden |
| KOL/KOC engaged in advertising or endorsement services | Employment income | N/A | 10% withholding (subject to annual PIT finalization under progressive rates) | 10%–35% |
| Affiliate marketing commissions / intermediary services | Business service income | 5% | 2% | 7% of gross revenue |
| Livestream sale of goods | Distribution and sale of goods | 1% | 0.5% | 1.5% of gross revenue |
| Dropshipping | Commercial services / E-commerce | 5% (or 1%) | 2% (or 0.5%) | 1.5%–7% of gross revenue |
4. Compliance Recommendations for KOLs/KOCs and Online Sellers
- Proactively register a Tax Identification Number (TIN) and establish a household business or enterprise. Once revenue becomes stable and significant, formal business registration facilitates transparent financial management, lawful invoicing, and legitimate tax planning.
- Maintain separate business banking accounts. Business income should be segregated from personal expenditures to facilitate bookkeeping, tax reporting, and compliance.
- Regularly reconcile revenue reported by e-commerce platforms. Sellers should periodically verify sales reports from TikTok Shop, Shopee, affiliate networks, and other platforms against actual receipts to ensure timely and accurate tax declarations, whether on a quarterly or annual basis.
- Seek professional tax advice where income structures are complex. Individuals earning cross-border income through dropshipping, Google, YouTube, TikTok Creator Fund, or similar platforms should consult qualified tax agents or legal professionals to ensure proper tax compliance and minimize the risk of future tax reassessments and penalties.
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
Nguyen Thuy Duong