Draft on E-commerce Decree in Vietnam: The Effects on Foreign Investors

Posted 14.04. 2021 by Cekindo

To regulate e-commerce activities and platforms, a draft decree with No. 52/2013/ND-CP (Decree 52) was introduced with some amendments by Vietnam’s government. This decree will cover and must be implemented on local as well as foreign businesses in Vietnam. The purpose of amending the decree is to improve the tax collection regulations and management.

This draft regulation will impact foreign investors and foreign traders who are working as e-commerce service providers and suppliers. According to the draft decree, an e-commerce service is any business activity where an individual or company sets up an e-commerce website to provide services. Such services are related to trade, supplies of service activities, sales of goods, and bringing imports in Vietnam.

The following are some terms and conditions that make a website suitable for e-commerce activities as per the draft decree.

  • Must have services of goods delivery to provide things to customers.
  • Allows e-commerce members to use sale booths for showcasing and promoting products and services.
  • Members are allowed to use and open accounts facilitating interaction as well as a transaction with customers.

E-commerce regulations carried by Social Networking Websites

After amendments in the draft decree, the social networking websites also tried to adopt e-commerce regulations. Thus, the social networks must be liable to regulations and conditions and have subscribers who can pay them a fee directly or indirectly for the activities. One of the examples of such regulated social networking websites is the Facebook marketplace.

Requirements For Foreign Businesses in Vietnam

If foreign businesses are looking to set up a representative office in Vietnam, their e-commerce business must comply with Vietnamese laws. Such e-commerce service providers verify the foreign business identities who sell goods and services. The following are some basic requirements for foreign business to be fulfilled in Vietnam.

  • Must be compiled with imports and exports laws for bringing up a new business in Vietnam.
  • Needs to evaluate and determine all the Vietnam commercial agents.
  • Have management for implementing imports relevant to goods and services carried by foreign businesses.

It is evident that the decree draft is unclear because it doesn’t explain what would happen to the foreign business if not meeting the mentioned requirements. Besides this, it has been observed that the new regulation will impact e-commerce merchants, including eBay, Amazon, Netflix, and Facebook. The new law is proposed to impose all the tax obligations on foreign investors and merchants.

You might want to read: Starting E-Commerce Business in Vietnam: Why and How

Impact of E-commerce Draft Decree on Foreign Investors

Foreign businesses, particularly those involved in B2C and cross-border e-commerce, must comply with laws. According to the draft decree, foreign traders and foreign investors in e-commerce business are defined as

“Foreign investors are those who have e-commerce websites set up under domain names of Vietnam, in the Vietnamese language, and avail of above 100,000 transactions from Vietnam every year.”

If you are interested in setting up your foreign business in Vietnam, you need to set up an office or appoint a legal representative in Vietnam to carry out the e-commerce services. It is possible if and only if the number of visits, purchase orders, and transactions exceeds the threshold. In view of this, all the exported and imported goods must be subjected to e-commerce providers to cooperate with authorities to prevent goods and services transactions.

The Vietnam Government stated that this threshold would be regulated for transactions and purchases by the Ministry of Industry and Trade, Ministry of Finance, and Ministry of Information and Communication. Furthermore, every e-commerce service provider has to file and submit a report on business operations to the Ministry of Industry and Trade by 15th January.

Market Accessibility, Logistic Companies, and Payment System

According to the LOI, the draft decree is introduced under the ambiance of Law on Investment, so foreign investors are obliged to carry out business investments. Moreover, foreign investors having investment in e-commerce should be listed in the MoIT announced “Internationally Reputable Technology Companies.” However, it is not mentioned whether these proposed regulations are retroactive or not. So, these regulations don’t affect pre-approved foreign investments.

Besides this, the e-commerce decree draft provides and supports logistic services. Such services are related to logistic companies having liabilities to share for documentation of goods, services, and delivery. It also ensures the guaranteed payment system by keeping payments in an intermediary account for settling all claims, sales, and deliveries between sellers and customers. Such e-commerce activities have been increased so high due to greater growth trajectories.

In short, the new regulations in the draft decree have made visible progress in the e-commerce field. By keeping in view this advancement, it is expected that almost 55% of the population will be involved in online shopping till 2025. Stay vigilant for monitoring all the issues and insights regarding developments and regulations of e-commerce activities.

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When you register yourself with us, we will assist you in everything from starting a business to the requirements for keeping your business in compliance with the Vietnam Government. Your success as a foreign business owner in Vietnam is our achievement.