Vietnam Passes Regulation on E-commerce: Decree 85

• Vietnam just lately handed Decree 85/2021/ND-CP on regulating e-commerce actions and platforms in Vietnam.
• Decree 85 amends and dietary supplements Decree 52 and can influence international and native companies concerned with e-commerce platforms.
• The rules are supposed to regulate the fast-growing e-commerce sector whereas enhancing the federal government’s potential to impose tax obligations on e-commerce service suppliers.

Vietnam’s authorities on September 25 handed Decree 85/2021/ND-CP (Decree 85) regulating e-commerce platforms and actions in Vietnam. Decree 85 amends and dietary supplements a number of elements of Decree 52 on e-commerce. It will cowl native in addition to international companies that conduct e-commerce actions in Vietnam. Decree 85 takes impact on January 1, 2022.

Dezan Shira & Associates’ Enterprise Advisory Providers Supervisor Tam Nguyen notes that “the principle function of constructing an modification to the present rules on e-commerce is for the administration of tax assortment. Thus, the rules will influence international buyers straight which can be concerned in e-commerce actions in addition to international merchants who’re e-commerce suppliers and repair suppliers.”

E-commerce actions outlined

As per the Decree, an e-commerce service is outlined as any e-commerce exercise the place the dealer, particular person, or group offers e-commerce companies and units up an e-commerce web site that provides a spot for different merchants, organizations, and people to hold out commerce, gross sales of products or the availability of service actions.

The definition is extra particular and doesn’t consists of companies which can be solely concerned in web site and software design and due to this fact don’t straight take part within the enterprise operations of such web sites, which is a welcome change.

As per Decree 85, a web site is deemed offering e-commerce companies if it offers the next situations:

• It permits members to open gross sales cubicles for displaying and/or selling items and companies;
• Members can open accounts that present interplay or transactions with clients; and
• Have companies associated to the supply of products and companies with clients.

Social networking web sites fall below rules

Thus, social networks could be chargeable for regulation as e-commerce platforms in the event that they meet the aforementioned situations but additionally make their subscribers straight or not directly pay a price to hold out these actions. An instance could be the Fb market.

Whereas international companies are required to adjust to Vietnamese legal guidelines, Vietnamese e-commerce suppliers are required to confirm the identities of international companies promoting items on their e-commerce platforms. They’re additionally required to do the next:

• Ask international companies to adjust to export and import legal guidelines for these companies that don’t have any presence in Vietnam;
• Ask international companies to find out commercials brokers in Vietnam; and
• Manage the implementation of import actions relating to items traded by international companies.

Thang Vu, Affiliate Supervisor, Tax at Dezan Shira & Associates’ Ho Chi Minh Metropolis workplace notes that the brand new rules will affect a number of worldwide e-commerce retailers like Amazon, eBay, Fb, and Netflix. The aim of the brand new regulation is to impose tax obligations on retailers, whether or not native or international, on Vietnam-sourced earnings from native particular person clients.

The earlier withholding tax system might solely maintain native corporations chargeable for such obligations and the brand new regulation goals to rectify such a billion-dollar-shortfall of tax assortment.

Impression on international buyers

Overseas companies together with these concerned with cross-border e-commerce and B2C e-commerce companies should adjust to native legal guidelines. As per the Decree, international merchants engaged in e-commerce actions is outlined as:

• Those that arrange e-commerce web sites below Vietnam domains (for instance .vn);
• Those who arrange e-commerce web sites which can be within the Vietnamese language; and
• Those who arrange e-commerce platforms which have greater than 100,000 transactions originating from Vietnam in a yr.

For such, the international enterprise will probably be required to arrange a consultant workplace in Vietnam.

As well as, international companies are required to nominate a authorized consultant or arrange a consultant workplace in Vietnam in the event that they perform the next e-commerce actions:

• Those who arrange an e-commerce web site utilizing Vietnam domains;
• Those who arrange a web site that’s within the Vietnamese language; and
• Those who arrange e-commerce platforms the place the variety of transactions or visits or buy orders by Vietnamese organizations or people exceeds a selected threshold.

Below the final bullet level, the Ministry of Business and Commerce (MoIT) in collaboration with the Ministry of Info and Communications, Ministry of Finance and so forth, will regulate the brink for the variety of transactions or purchases.

Any imported or exported items are topic to customs procedures and e-commerce suppliers are required to cooperate with the related authorities to stop the unlawful transaction of products and companies. E-commerce suppliers should file a report on their enterprise operations and undergo the MoIT by January 15 of yearly.

Market entry situations

Decree 85 comes below the ambit of the brand new Regulation on Funding (LOI), which got here into impact in January 2021. Overseas buyers are due to this fact required to hold out funding in e-commerce actions in compliance of the LOI. Moreover, international buyers that spend money on e-commerce companies have to be listed below the ‘internationally respected expertise corporations’ as introduced by the MoIT.

Whereas how this record is generated remains to be unclear, exceptions are anticipated to be given to buyers contributing to small and medium-sized startups. That is additionally more likely to have important implications for Vietnamese e-commerce corporations that increase funds from international buyers as they must meet the brand new necessities.

The Decree, nevertheless, doesn’t point out that the rules are retroactive, due to this fact the brand new rules shouldn’t have an effect on international funding that has already been authorized.

Logistic corporations

The Decree additionally provides corporations offering logistics companies and different supportive companies that may come below the ambit of the Decree. Logistic corporations will share legal responsibility to supply documentation relating to the origin of products throughout supply.

Assured fee system

Decree 85 additionally mandates a assured fee system the place e-commerce web sites are required to permit clients to make funds utilizing this method. Which means funds have to be saved in an middleman account for a sure period of time to settle any claims between clients and sellers.

The Decree doesn’t specify the period of time earlier than the fee could be launched to the e-commerce supplier however this proposal could harm small e-commerce corporations that rely upon income and money circulate.

Different adjustments

If a web site doesn’t have an internet ordering operate then there isn’t any have to notify or register with authorities authorities. The purpose of the varied legal guidelines are to make sure that as e-commerce grows it’s clear whereas making certain that the federal government can take care of counterfeit merchandise and the infringement of mental property rights.

Takeaways

E-commerce actions in Vietnam are on a excessive progress trajectory due to the pandemic and shifting client patterns. Decree 85 is a part of the federal government’s plan to help this progress whereas regulating e-commerce actions in Vietnam. The federal government has set out a goal of reaching 55 % of the inhabitants concerned in on-line procuring by 2025.

Whereas the Decree presents extra safety for Vietnamese customers, it tightens situations for international funding in e-commerce corporations in Vietnam.

Be aware: This text was first revealed in March 2021, and has been up to date to incorporate the newest developments.