Despite
earning much from advertisements, the perhaps most well-known social networking
sites, Google and Facebook, have paid very little in taxes in this country.
Huge
advertising revenues
According to statisitics by AC Nielsen and
TNS, Google holds around 95 per cent of online searches, and is the gateway for
70 per cent of websites in Vietnam, showing that its Google AdWords
advertisement operation is thriving.
An undisclosed source said that somewhere
around 60 per cent of online advertisements in Vietnam are delivered by foreign
companies.
This same source added that Google earned $40
million from its advertising services in 2011, just from this country.
At the same time, Facebook and You Tube are
also intensifying their advertising campaigns throughout the region. Even
though there are no official figures from these companies, it is estimated that
their ad revenues are extremely high.
Nguyen Hoa Hong Thanh, director of Emerald
Company, one of Google’s nine official agents in Vietnam, said that in order to
become an official Google agent, they were required to be making profits of at
least $10,000 per quarter. Only official agents are allowed to sign contracts
with Google, a necessity for tax payment.
According to Thanh, Google’s nine official
agents in Vietnam account for around 50 per cent of online advert revenues in
the country.
Lax
management
Even though these sites reap great profits
from Vietnam, they manage to evade paying taxes by using international credit
card systems. This makes it difficult for authorities to levy taxes
domestically.
Vo Do Thang, director of the Athena Network
Security Centre, said, “International networks intentionally avoid establishing
offices in Vietnam to avoid legal responsibility in the country."
Operations in Vietnam are maintained by
separate representatives, based here, who are responsible for maintaining
information exchange and communications with the headquarters outside the
country. Thang added that unofficial agents also play a role by conducting
transactions through credit card systems, which are difficult for Vietnamese
authorities to trace.
These networks have also been seeking other
ways of transferring funds, which would allow them to avoid paying taxes. For
example, Facebook has begun to use as a means of payment.
Facebook itself claims that these new means of
money transactions can open up a new era in the market by making it easier for
users to sell ad space.
Le Thi Thu Huong, deputy director of HCM City
Tax Department, admitted, “Although we have just recently become aware that
these companies are making a lot of money in Vietnam, we are having
difficulties in terms of taxing these earnings because they do not have
branches within the country."
“The levying of taxes has, so far, been based
on companies that register in Vietnam and declare their taxes here, and whose
books are subject to inspection. We still don't have a system in place that is
capable to deal with internet-based enterprises operating here," Huong
shared.
The fact that foreign social networking
websites make big money in Vietnam has put local digital content enterprises in
great difficulties.
Nguyen Hoang Tuan Anh, External Affairs
director of the game-operator VNG, said that, while local firms have to pay
taxes and are overseen for their advert content, foreign social networking
websites and search engines operating in Vietnam are not. This has fostered an
unequal playing field, which puts domestic sites at a great disadvantage."
Solutions
needed
Huong added that tax agencies are scrutinising
the business practices of the large social networking sites.
The preliminary results of their inspection
showed that Yahoo’s tax payment in Vietnam has increasing marginally in recent
years, reaching over VND4.8 billion ($228,180) in 2011, compared to VND2.7
billion ($128,351) in 2010, while, in 2010 they payed just VND690 million
($32,800) in 2009, she noted.
The Ho Chi Minh City Tax Department will soon
inspect the tax declarations and payment by Google’s nine official agents in
Vietnam, she added.
In order to heighten tax collection from
foreign social networking websites, Thang, from the Athena Centre, proposed
that Vietnam should follow China’s example in restraining the bandwidth of
foreign social websites that do not declare taxes in the country.
Thanh nien, dtinews
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