Selling on e-commerce platforms such as Shopee, TikTok Shop, Lazada or Tiki is now a common sales channel for many individuals and household businesses (hộ kinh doanh). As e-commerce grows, tax management is also getting stricter.
From 1 July 2025, Decree No. 117/2025/ND-CP took effect. It requires e-commerce platforms with an online payment function to withhold, declare and pay tax on behalf of sellers for each successful transaction. At the same time, the tax authorities are increasing their control of revenue splitting used to avoid tax obligations.
So what should online sellers keep in mind to do business lawfully and limit legal risk?
E-commerce platforms will withhold tax on behalf of sellers
Under Decree 117/2025/ND-CP, for transactions on an e-commerce platform with an online payment function, the platform must withhold the tax payable as soon as the transaction is completed. It then declares and pays the tax on behalf of the seller as required, and provides the transaction data to the tax authority.
This means sellers no longer just declare their own revenue as before. The tax payable is withheld directly from the revenue earned on the platform.
Withholding rates for individuals selling online
The withholding rate depends on the type of business activity and on the seller’s tax residence status.
An FC Legal lawyer will discuss it with you and propose a suitable approach.
Distribution of goods
- Resident individuals: value-added tax (VAT) 1% and personal income tax (PIT) 0.5%. The total withheld is 1.5% of revenue.
- Non-resident individuals: the total withheld is 2% of revenue.
Services provided on digital platforms
- Resident individuals: VAT 5% and PIT 2%. The total withheld is 7% of revenue.
- Non-resident individuals: the total withheld is 10% of revenue.
| Activity | Resident individual | Non-resident individual |
|---|---|---|
| Distribution of goods | VAT 1% + PIT 0.5% = 1.5% | 2% in total |
| Services on digital platforms | VAT 5% + PIT 2% = 7% | 10% in total |
Summary table of the rates set out above.
When the type of transaction cannot be identified
If the e-commerce platform does not have enough information to tell whether a transaction is a sale of goods or a supply of services, the system applies the highest withholding rate under the regulations.
Sellers should therefore declare their business lines, products and services fully and accurately, so that tax is not withheld at a higher rate than it should be.
Tax authorities are tightening control of e-commerce data
Data from e-commerce platforms, e-invoices, bank accounts and payment platforms is now being connected for tax management purposes.
This makes it easier for the tax authorities to compare actual revenue with declared revenue, and to detect incomplete declarations or signs of tax evasion.
For individuals and household businesses with large online sales, complying with tax rules is becoming more and more important.
Legal risks of splitting revenue
One practice the authorities have been paying particular attention to recently is revenue splitting.
This means dividing a business into several household businesses, or registering it in the names of several different individuals, to reduce the revenue of each one. The aim is to avoid the duty to declare or to reduce the tax payable.
In some cases, revenue is split by setting up several business establishments that are in fact all run by one person or one group of people.
If a business model is organised only to avoid tax obligations, the individuals or organisations involved may face many legal risks.
Lessons from a real case
Recently, the public has followed closely a case involving the Đại Nam cosmetic dentistry chain. The authorities alleged that the owner ran the business through dozens of clinics registered as household businesses in the names of many different individuals, in order to reduce the obligations to declare and pay tax. The investigating authority has examined the case and is handling acts showing signs of violation in accordance with the law.
This is a warning to individuals and businesses that use a model of several household businesses or several business establishments that does not match how the business actually operates.
Is it allowed to run several shops?
The law does not prohibit individuals or businesses from opening several business establishments.
However, the business model must be organised in line with the law and must reflect how the business actually operates.
Setting up several household businesses or establishments, or putting them in other people’s names, only to reduce taxable revenue or avoid tax obligations may be examined by the authorities during an inspection.
So before expanding a business network, owners should get advice on the legal structure, the governance arrangements and the tax obligations to limit risk.
What should businesses and household businesses do?
To reduce legal risk in e-commerce, individuals and household businesses should:
- review the business model they currently use;
- correctly identify whether the activity is selling goods or providing services;
- track actual revenue on each platform;
- fully meet their tax declaration and payment obligations;
- consult a lawyer or tax adviser before setting up a model with several shops or several household businesses.
Complying with the rules from the start helps limit tax risks, administrative penalties and legal disputes that may arise.
Conclusion
E-commerce platforms withholding and paying tax on behalf of sellers under Decree 117/2025/ND-CP is an important change in how tax on online business is managed. At the same time, the tax authorities are increasing their control of revenue splitting and of business models that show signs of avoiding tax obligations.
If you sell on e-commerce platforms, or plan to expand into several shops, locations or household businesses, you should review your business model and assess the legal risks to make sure you comply with the law.
FC Legal provides legal advice on tax, e-commerce, business structuring and risk management. We help individuals and businesses choose an approach that is suitable, safe and effective as tax policy is managed more and more strictly.
Selling online or planning to expand?
FC Legal can review your business model, check how your revenue is declared and propose a structure that fits how your business really operates.
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This article is general information and does not replace advice on a specific case. It reflects the law in force at the date of publication.
Prepared and reviewed by the FC Legal legal team, FC Legal Law Company Limited, advising businesses on governance, contracts, employment, intellectual property and personal data protection.
