Vietnam’s New Tax Withholding Rules for Digital Platforms

June 30, 2025

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Foreign and domestic e-commerce and digital platforms operating in Vietnam must act urgently to meet all the newly introduced tax withholding requirements imposed under Decree 117. The implementation of this Decree, adopted on June 9, 2025, follows the Government's amendment of VAT, tax administration, and personal income tax laws, all of which are part of a broader national 2030 tax reform strategy.

Key Requirements for Digital Platforms

Under Decree 117, which takes effect on July 1, 2025, the withholding tax rates vary depending on the nature of the transaction and the seller's place of residence. Therefore, the applicable rate for transactions relating to the sale of goods will be between 1.5% and 2%, whereas rates of 7% to 10% apply to the provision of services.

Domestic and foreign digital platforms with payment functions, such as e-commerce platforms, must withhold, declare, and remit VAT and personal income tax on behalf of individual sellers. The first filing and payment due date is August 20, 2025.

However, due to inconsistent effective dates across three tax laws, a delay in providing necessary guidance, and a tight implementation window, digital platforms, especially foreign ones, face significant burdens and impracticalities in meeting all the requirements and obligations.

For example, to meet reporting requirements, digital platforms must collect and process personal data of individual sellers, which may lead to the need for foreign digital platforms to revise data processing policies and complete data transfer impact assessments to collect seller data lawfully.

Furthermore, whether foreign digital platforms must appoint a certified Vietnamese provider of electronic withholding certificates to comply with the requirement to issue withholding tax certificates to resident individuals remains unclear.

Conclusion

There are numerous uncertainties associated with the new requirements for e-commerce and digital platforms. Notably, digital platforms underlined that between nine and 12 months is needed from the moment the official guidelines are published to develop and adjust the system to meet new withholding and filing requirements.

Therefore, it remains to be seen how the Vietnamese government will act in the upcoming period, and whether it will grant a grace period for complying with the implemented rules and regulations.

Source: Bloomberg, Decree 117/2025/ND-CP, VATabout

What is Decree 117 and when does it take effect?

Decree 117 is a new regulation in Vietnam that introduces tax withholding obligations for domestic and foreign digital platforms. It takes effect on July 1, 2025.

Who is affected by Vietnam's new tax withholding rules?

Both domestic and foreign e-commerce and digital platforms that facilitate payments are affected, particularly those that handle transactions for individual sellers in Vietnam.

What tax rates apply under Decree 117?

The withholding tax rates vary: 1.5% to 2% for goods transactions and 7% to 10% for services, depending on the seller’s residence and type of transaction.

What are the main compliance challenges for foreign platforms?

Foreign digital platforms face short deadlines, lack of clear guidance, potential changes in data policies, and uncertainty around the appointment of local certificate providers.

What is the deadline for the first tax filing and payment?

The first tax filing and payment under Decree 117 is due on August 20, 2025, leaving digital platforms with a limited timeframe to implement the required systems.

Is there a possibility of a grace period for compliance?

While many platforms argue that 9 to 12 months are needed to prepare, it is still uncertain whether the Vietnamese government will offer a grace period for compliance.

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