Foreign websites don’t pay tax in Vietnam

Trung and family members, for example,  spent a trip to Thailand in mid-October 2016. They booked hotel rooms via Agoda.com, a website well known to many Vietnamese travelers. 

Trung said he made a mistake when booking rooms and he called Agoda.com on the hot line shown on the website. This was a phone number registered in Thailand, but Trung still could receive guidance in Vietnamese to change the booking.

Agoda is not the only foreign website which does business and makes money in Vietnam. Booking.com, a website owned by Priceline Group, Expedia.com & Hotels.com belonging to Expedia and the room leasing service via Airbnb have also been present in Vietnam.

Some travel firms said that websites can earn big money of up to trillions of dong in Vietnam. Agoda reportedly receives commission of 10%-25% from hotels and is believed to hold the largest market share.

An expert estimates that Agoda alone can get revenue of VND4.5 trillion a year in Vietnam, or US$200 million. And this amount of money is also profit it can make, because it doesn’t pay tax for revenue.

Le Dac Lam, general director of Vietnam Trip, warned that if the state does not apply necessary measures to collect tax from the websites, it would lose up to VND10 trillion in tax revenue by 2020.

Lam complained that this is unfair for Vietnamese businesses that foreign websites don’t have to pay tax.

“The State wants Vietnamese businesses to become stronger and more competitive in the world market, but it doesn’t have necessary methods to protect Vietnamese businesses from unhealthy competition,” he said.

It is estimated that 850,000 Vietnamese travel Thailand each year and spend US$53 million to book hotel rooms via internet.

V.K, who leases his rooms on Airbnb, said he prefers posting advertising for room rent on foreign websites because of the convenience. In general, he pays commission of 10% to Airbnb. As for TripAdvisor, he would pay 12%-13% if the revenue is over US$400. 

V.K admitted that the taxation agency has not asked him to pay tax.

A senior official of the General Department of Taxation admitted that it is difficult to ‘track down’ Agoda’s steps in Vietnam to force it to pay tax, because Agoda still has not set up business in Vietnam. 

Lawyer Truong Thanh Duc, arbitrator at the Vietnam International Arbitration Center, suggested applying the contractor tax, i.e. the taxation body will collect withholding tax from the partners of the websites in Vietnam.