The Rise of E-Commerce in Vietnam
Hà Nội is witnessing a transformative shift in the retail landscape, driven by the exponential growth of e-commerce. Over recent years, millions of household businesses and small enterprises across Việt Nam have been empowered by digital platforms, opening new doors to market opportunities. However, with this rapid expansion come significant challenges, including rising operational costs, intense price competition, and stringent regulatory compliance requirements.
The Need for Compliance in a Standardized Market
As the e-commerce sector in Việt Nam grows, it is moving toward a more standardized operational framework. This change means that sellers must adapt swiftly to new tax policies, infrastructure fees, and data management related to their operations. Staying informed and compliant has never been more critical for maintaining a competitive edge and ensuring long-term viability in the market.
Key Measures for Operational Effectiveness
In light of the recent changes that took effect on July 1, industry expert Nguyễn Mạnh Tấn has outlined three essential strategies for sellers to maintain operational effectiveness:
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Understanding Financial Performance: Tấn emphasizes the importance of regularly reconciling financial records. Sellers should keep track of the amounts received in their bank accounts, total operating expenses—including platform fees and taxes—and the final profit after tax deductions. This diligence in financial oversight not only enhances transparency but also aids in identifying cost fluctuations early.
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Adjusting Product Portfolios: Sellers should focus on increasing the proportion of higher-margin products. Items priced above VNĐ250,000 ($9.56) tend to be less affected by new tax structures, while lower-priced products (under VNĐ150,000) face greater risk of profit erosion. Opting to raise retail prices might deter customers, so focusing on expanding into more lucrative product lines and negotiating better sourcing terms is vital for maintaining profitability.
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Developing Multi-Channel Sales Strategies: Diversifying sales channels can shield sellers from market fluctuations and enhance customer data control. By re-engaging customers directly, outside major e-commerce platforms, businesses can improve profit margins and provide better customer service.
Support from E-Commerce Platforms
Recognizing the need for guidance, major e-commerce platforms are rolling out initiatives to support their sellers through this transition. For instance, Shopee has stepped up as a conduit between tax authorities and sellers. Through in-person workshops, online seminars, and detailed communication programs, Shopee aims to ensure that sellers understand and comply with new tax regulations.
Since mid-May, Shopee has required sellers to update their identification details and tax codes in preparation for accurate tax declarations and payments. Representatives from the platform have committed to being available to answer questions throughout this process.
Initiatives by TikTok Shop
TikTok Shop has also taken a proactive approach by issuing clear guidance on tax obligations. This includes requiring legal names, ID numbers, and accurate business types from sellers. Collaborating with the Ministry of Industry and Trade, TikTok is conducting training programs designed to enhance the legal and tax knowledge of local businesses and individuals, including key opinion leaders and consumers.
Tax Withholding Regulations
As of July 1, new regulations mandate that e-commerce platforms must officially declare and withhold taxes on behalf of individual sellers and household businesses. This includes a 1% value-added tax (VAT) and a 0.5% personal income tax on goods, alongside a 5% VAT and 2% personal income tax on services. These changes mean that tax deductions are now directly applied to each order, a shift that sellers must navigate carefully.
Navigating a Competitive Landscape
In this rapidly evolving and competitive market, the combination of strategic cost management, restructuring product portfolios, and expanding multi-channel sales is essential for sellers. The timely support provided by e-commerce platforms further enriches sellers’ ability to adapt and thrive under new operational conditions. With the right strategies and resources, sellers can maintain stable and sustainable operations in this new environment.