How is tax evasion in e-commerce handled in Vietnam?

Tax evasion in Vietnam’s e-commerce sector is becoming a major legal risk for many online sellers, especially foreigners. Many cases have been inspected and penalized due to a lack of understanding of tax obligations. When being “flagged,” what legal consequences could you face?

Tax evasion in e-commerce: Understanding to avoid legal risks

In recent years, e-commerce in Vietnam has grown rapidly. However, alongside this growth, tax authorities have strengthened control over tax evasion, especially for individuals and cross-border businesses.

For foreigners living, working, or doing business in Vietnam, this is a legal risk that should not be underestimated. Many cases involve unintentional violations but are still investigated due to unfamiliarity with local laws.

What is considered tax evasion in e-commerce?

Under the Law on Tax Administration 2019 and the Criminal Code 2015 (amended 2017), tax evasion may include:

• Failure to register for tax when conducting business
• Failure to declare or false declaration of online revenue
• Using personal accounts to receive payments to avoid taxes
• Not issuing invoices or intentionally concealing transactions
• Transferring revenue abroad to avoid tax obligations in Vietnam

Common scenarios in e-commerce include:

• Selling on platforms (Shopee, Lazada, TikTok Shop…)
• Selling via social media (Facebook, Instagram…)
• Dropshipping or cross-border selling

Notably, Vietnamese tax authorities now connect data with banks, e-commerce platforms, and payment systems, making it increasingly difficult to hide revenue.

When is tax evasion subject to criminal prosecution?

Not all cases are criminally prosecuted. However, under Article 200 of the Criminal Code, serious violations may lead to criminal liability.

Key thresholds include:

• Tax evasion amount from VND 100 million or more
• Or less than VND 100 million but repeated after administrative penalties

Possible penalties:

• Fines up to VND 4.5 billion (for organizations)
• Imprisonment from 3 months to 7 years (for individuals)
• Business or professional bans

For foreigners, additional consequences may include:

• Deportation from Vietnam
• Impact on visa or work permit
• Difficulty re-entering Vietnam

This often causes panic when receiving an official summons.

What should foreigners do if involved?

If you or someone close to you is under investigation, the key is not fear—but correct action from the beginning.

Initial handling can significantly affect the outcome.

Common mistakes to avoid

• Working with investigators without a lawyer
• Signing documents without full understanding
• Improperly transferring money to “fix” the issue
• Providing inconsistent statements due to panic

These may negatively affect your legal position.

Safe legal strategies

1. Stay calm and identify your legal status
   Are you being verified, investigated, or prosecuted?
2. Work with a lawyer
   A lawyer helps protect your rights and ensures proper communication.
3. Review all business activities
   Revenue, payments, and tax compliance.
4. Consider remediation measures
   Paying outstanding taxes and cooperating may be mitigating factors.

Are you or your loved ones facing tax-related issues in Vietnam’s e-commerce sector?

Contact DEDICA Law for appropriate legal strategy and effective protection of your rights.