Vietnam’s Digital Economy Boosts State Tax Revenue

Record digital tax haul shows momentum

Vietnam is collecting far more tax from the fast growing digital economy, and the pace is accelerating. In the first eight months of 2025, the General Department of Taxation reported nearly 135 trillion VND, about 5 billion USD, in state budget revenue from ecommerce and other digital activities. That total is up 63 percent from a year earlier and reflects both a larger volume of online transactions and tighter, more modern tax administration. The revenue mix is broad. Domestic organizations contributed more than 121 trillion VND, 170 foreign suppliers paid 8.71 trillion VND, and 918,000 households and individuals contributed nearly 1.78 trillion VND. A further 156,000 households and individuals used the Electronic Information Portal to declare and pay 2.04 trillion VND. The portal, launched in 2022, has changed compliance for overseas providers that sell into Vietnam without a legal presence.

Foreign supplier payments have risen each year since the online portal opened. Authorities report 1.85 trillion VND in 2022, 6.89 trillion VND in 2023, 8.69 trillion VND in 2024, and 8.71 trillion VND in just the first eight months of 2025, which is a 40 percent jump from the same period of 2024. The rapid rise coincides with clearer rules for cross border transactions and easier electronic registration and filing for companies without a permanent establishment in the country. A mid 2025 policy shift, which doubled the value added tax on foreign suppliers from 5 percent to 10 percent while keeping corporate income tax at 5 percent, is expected to lift collections further.

The policy pivot arrives as Vietnam’s digital economy expands. One estimate put the size of the digital economy at 30 billion USD in 2023 with a path to 45 billion USD in 2025. Ecommerce is the anchor, with online travel, media, ride hailing, and food delivery adding scale. The latest tax data shows how quickly that growth is feeding into the state budget. Early snapshots of 2025 already pointed to momentum, with the Ministry of Finance citing 74.4 trillion VND collected in the first five months, up 55 percent year on year. The eight month total reinforces that trend and underlines a change in how Vietnam manages taxation of digital services and online sellers.

What is driving the revenue surge?

Three forces are working together. The first is a larger and more diverse base of online commerce. The second is a policy framework that brings foreign and domestic digital players into the tax net through clear rules and electronic systems. The third is stronger enforcement paired with better data, including integration with platforms, banks, and payment intermediaries.

Digital economy momentum

Digital services are now part of daily life in Vietnam. Shoppers buy from marketplace apps, small sellers reach customers through social media, and enterprises use cloud software, online advertising, and digital content platforms. A growing middle class and a high rate of mobile internet usage have kept transaction volumes rising. Studies indicate that Vietnam’s digital economy reached about 30 billion USD in 2023 and could reach 45 billion USD by 2025, with ecommerce as the main driver. More activity creates more taxable events, from platform commissions to advertising services to subscription content.

Policy architecture built since 2019

Vietnam updated its legal framework to address cross border digital trade. The Law on Tax Administration No. 38/2019 and guidance such as Circular No. 80/2021 require overseas suppliers without a permanent establishment in Vietnam to register, declare, and pay tax when selling digital services or goods to Vietnamese customers. There is no minimum revenue threshold for registration by foreign suppliers. Authorities use payment information, addresses, and access data such as SIM country code or IP location to determine whether a customer is in Vietnam. When an overseas supplier does not comply, banks and payment service providers can be directed to withhold or report payments, and Vietnamese business partners must withhold in business to business arrangements.

The launch of the Electronic Information Portal in 2022 gave foreign suppliers a direct way to register, file, and pay online. The portal has enabled close to 26.15 trillion VND in tax from overseas providers since launch. In parallel, Vietnam’s 2024 VAT Law, effective July 1, 2024, broadened obligations for foreign suppliers and platform operators and raised the annual turnover threshold for business households to become liable for VAT to 200 million VND, easing pressure on the smallest sellers. Local tax departments also rolled out eTax Mobile and expanded e invoicing to simplify electronic payments for individuals and micro businesses.

New rules from July 2025 reshape platform responsibility

A key change arrived on July 1, 2025. Decree No. 117/2025 makes platform operators, both foreign and domestic, withholding agents for taxes arising from transactions on their systems. The measure is designed to keep compliance simple for millions of small sellers and to channel tax collection through a small number of large intermediaries.

Under the decree, platforms must withhold and remit value added tax on transactions by resident and nonresident sellers. They must also withhold and remit personal income tax on behalf of nonresident individuals. If a platform cannot determine a seller’s revenue from completed transactions, it must apply the highest applicable deduction rate as a fallback. Filing and payment are on a monthly schedule, which tightens the reporting cycle and gives tax officials a steady view of activity.

What sellers and platforms need to do

Platforms need to implement transaction level withholding modules, reconcile payments, and file monthly returns to the tax authority. They will need robust onboarding and Know Your Customer processes to correctly identify seller status and location. Households and individuals who sell through platforms should expect tax withholding at the point when an order is confirmed and payment is completed, then reconcile with their annual obligations. Many sellers will benefit from platform issued e invoices. For foreign suppliers that receive payments from Vietnamese consumers directly, continued use of the Electronic Information Portal remains the path for registration and filing.

• Register or confirm tax accounts for sellers and integrate onboarding with identity checks
• Map each transaction to the correct tax rate, then withhold at settlement
• File monthly VAT and personal income tax reports and remit withheld amounts
• Maintain transaction and invoice data to support audits and customer inquiries

Foreign suppliers are paying more

Overseas providers of digital services were once hard to reach because they had no fixed presence in Vietnam. That gap has narrowed. Since 2022, major platforms and service providers have registered and are paying through the portal. The count of registered foreign suppliers reached 170 by August 2025, up from 158 reported in early June. Payments from this group rose from 1.85 trillion VND in 2022 to 6.89 trillion VND in 2023 and 8.69 trillion VND in 2024. In the first eight months of 2025 alone, payments reached 8.71 trillion VND.

Price inclusive taxes have shifted. For many digital services, Vietnam has historically applied a foreign contractor tax formula that captures VAT and corporate income tax in a blended way. From July 1, 2025, the VAT rate for foreign suppliers increased from 5 percent to 10 percent, while the corporate income tax component remains at 5 percent. The change aims to level the playing field between domestic and foreign providers that sell to Vietnamese customers. Some services may adjust prices or billing to reflect the change, and some suppliers may rework their invoicing to show VAT separately. The move also aligns the VAT rate on many digital services with the standard VAT rate in Vietnam, improving consistency.

Why the VAT rise matters

VAT is a consumption tax. It is collected at each stage in the supply chain and is usually borne by the final consumer. When an overseas digital provider charges Vietnamese consumers, VAT must be accounted for even if the provider has no office in the country. A uniform 10 percent VAT rate for foreign suppliers reduces arbitrage between local and offshore sellers. It also simplifies compliance for platforms that would otherwise manage multiple reduced rates. Many countries have taken this route by applying VAT or GST to cross border digital services supplied to local users.

Enforcement and data tools tighten compliance

Stricter enforcement has supported the revenue rise. In the first eight months of 2025, tax authorities collected more than 759 billion VND in arrears from 2,734 enterprises and 872 households and individual businesses. Earlier in the year, reviews of 164,661 taxpayers had already produced hundreds of billions of dong in retroactive assessments for enterprises and individual sellers. Auditors are using e invoice data, platform transaction records, and banking information to identify underreporting and to match payments with declared revenue.

Tax officials are also building capacity. Guidance handbooks for business households explain how to declare and pay electronically. The eTax Mobile app supports account setup, declarations, and payments from a smartphone. Technical systems are being upgraded for higher traffic and faster reconciliation. Authorities have said they will use data analytics and artificial intelligence to detect anomalous patterns, flag repeat errors, and focus on high risk cases. Banks and payment intermediaries are part of the control chain and can be asked to withhold or report on payments to non compliant foreign suppliers.

How Vietnam compares in ASEAN

Vietnam is often cited as an early mover in Southeast Asia for taxing foreign digital services through a dedicated portal and, since July 2025, through platform led withholding. The approach relies on VAT and existing income tax rules, rather than a separate digital services tax. That keeps the system closer to standard indirect tax frameworks used in many jurisdictions and avoids trade disputes tied to standalone digital services tax measures.

Regional peers are following diverse paths. Indonesia reported about 1.75 billion USD in tax revenue from its digital economy sector from 2022 through August 2024. That total covers VAT collected on ecommerce, taxes on crypto trading, taxes on peer to peer lending, and procurement related taxes. Vietnam’s eight month total for 2025 is larger, though categories differ and include a very large share from domestic organizations. Comparisons are not one to one, but the direction across the region is clear. Governments are applying VAT to cross border digital services and are introducing platform obligations to raise compliance.

Global reform remains unsettled

International negotiations under the OECD’s BEPS 2.0 Pillar One have slowed, and the previous standstill on unilateral digital services taxes has ended in several places. Some countries are reviving or expanding digital services taxes. This trend increases complexity for multinational platforms and content providers. Vietnam’s approach leans on VAT and withholding through platforms, combined with corporate income tax rules for foreign contractors, which reduces the risk of double taxation linked to standalone digital services taxes. Businesses still need to watch for overlaps when providing ancillary services or bundling offerings across jurisdictions.

What it means for businesses and consumers

For domestic ecommerce sellers, compliance will feel more automatic. Platforms will withhold VAT and, where required, personal income tax at the point of payment. Many small sellers will fall under the raised 200 million VND threshold for VAT liability, but those above the threshold should keep records current and reconcile with monthly statements issued by platforms. Sellers that operate across multiple platforms must make sure their total revenue and tax credits are tracked accurately.

Foreign suppliers should confirm registration on the Electronic Information Portal, obtain a tax identification number, and file on schedule. They should review pricing and invoices for the VAT increase that took effect on July 1, 2025. Where services are sold to Vietnamese businesses, local entities may be responsible for withholding. Payment flows should be structured to ensure the correct party accounts for VAT and corporate income tax.

Platform operators carry the largest operational load. They need systems that correctly classify sellers as resident or nonresident, map each transaction to the proper VAT base, calculate personal income tax for nonresident individuals where applicable, and remit monthly. They also need clear procedures when revenue cannot be determined at transaction level, since the decree requires applying the highest deduction rate in that case. Data retention, audit logs, and customer support processes are essential.

Consumers may see some price adjustments for digital subscriptions or advertising services linked to the higher VAT rate for foreign suppliers. The change aims to create tax neutrality between domestic and foreign sellers and to support a fair marketplace. Over time, consistent rules and platform level withholding are likely to reduce confusion and the administrative burden on micro sellers.

Practical steps to stay compliant

• Register on the Electronic Information Portal and keep credentials active
• Review contracts and pricing to reflect VAT at 10 percent for foreign supplied digital services
• Integrate invoicing and payment systems with platform or bank data to reconcile monthly
• Use eTax Mobile or the tax authority’s web portal to declare and pay on time
• Maintain records of transaction level taxes, invoices, and platform statements for audit support

Potential risks and challenges

Compliance costs for platforms will rise as they take on withholding and monthly reporting for millions of transactions. Data sharing between platforms, banks, and tax authorities must align with privacy rules. Household businesses that sell on social media need clear guidance on when withholding applies and how to reconcile amounts. Foreign suppliers that sell both to consumers and businesses must manage different rules for business to consumer and business to business sales, and monitor lists of registered suppliers published by authorities.

The new framework will reduce gaps, but disputes can still arise around correct classification of services, the location of customers, or the timing of tax points. Companies should document positions, maintain proofs of customer location, and be ready to support filings during reviews. Cross border providers also need to watch for changes in other markets that could create overlapping liabilities. Vietnam’s reliance on VAT and withholding, rather than a separate digital services tax, helps limit those risks, yet it does not remove them entirely.

Readers who want to track official updates can consult the General Department of Taxation and Ministry of Finance notices. Recent coverage with official figures is available from VietnamPlus and Vietnam News. Legal summaries of the July 2025 decree on platform withholding can be found through specialized tax publications. Background on the 2024 VAT Law and foreign supplier obligations is also available from advisory firms and legal analyses.

See: VietnamPlus report on the eight month 2025 tax results at VietnamPlus. A summary of the platform withholding decree is available at Global VAT Compliance. Context on Vietnam’s digital taxation framework is discussed at International Economics.

Key Points

• Vietnam collected nearly 135 trillion VND, about 5 billion USD, from ecommerce and the digital economy in the first eight months of 2025, up 63 percent from a year earlier
• Domestic organizations contributed over 121 trillion VND, 170 foreign suppliers paid 8.71 trillion VND, and 918,000 households and individuals contributed nearly 1.78 trillion VND
• Since the 2022 launch of the Electronic Information Portal, foreign suppliers have paid close to 26.15 trillion VND in tax
• VAT for foreign suppliers rose from 5 percent to 10 percent on July 1, 2025, while corporate income tax for these services remains at 5 percent
• Decree No. 117/2025 requires digital platforms to withhold VAT and personal income tax and to remit monthly
• Tax authorities collected more than 759 billion VND in arrears in the first eight months of 2025 and are using electronic data, e invoices, and analytics to tighten compliance
• Vietnam’s approach relies on VAT and platform withholding rather than a separate digital services tax, positioning it as a regional leader on cross border digital taxation