e-Commerce In Vietnam – What You Must Know:

Legal News & Analysis - Asia Pacific - Vietnam - Regulatory & Compliance

Asia Pacific Legal Updates

 

29 August, 2017

 

e-Commerce In Vietnam  – What You Must Know:

 

1. Who are the major ‘e’ commerce players in Vietnam?

 

Global Sources, Sendo, chodientu, Agoda, Foody, Lazada, Tiki, Zalora, Nguyen Kim and adayroi according to public source.

 

2. How are they structured?
 

a. Sales through global website/ Direct ship to customer
Mostly online travel agents are structured this way.

 

b. Sales through a global website/ Shipment through a Bonded Zone or Foreign Trade Zone

 

c. Sales through a local website/ imported by resident entity

Mainly sales through a local website and/ or imported by a resident entity.

 

d. Other

 

3. What is the Sales/ Shipment Volume


The latest statistics is from 2015, when the total e-commerce revenue was USD4.9 billion.

 

4. How are duties and taxes assessed?
 

Duties and taxes are assessed based on total revenue of the enterprise/ individual.


Enterprises doing e-commerce business registered in Vietnam must pay Value- Added Tax (VAT) at a basic rate of 10% and Corporate Income Tax (CIT) of 20%.

 

Individual residents doing e-commerce business without establishing a company in Vietnam will only be subject to tax obligations if they have annual sale revenue (including other sale activities) of over VND100 million. In particular, they have to pay VAT of 1% and personal income tax (PIT) of 0.5% over the sale revenue.

 

Foreign contractors must declare and pay taxes, either via their authorized person in Vietnam or tax agents.

 

5. What is the profile of a typical ‘e’ commerce shopper?
 

In 2015, an average monthly income of consumers in Hanoi and Ho Chi Minh City was USD700 – 720. Vietnamese people tend to save 11-12% of their income generally. They spend 27-29% of their income on fresh food and fast moving consumer goods (FMCG). An average Vietnamese online shopper spends USD150 purchasing goods & services online per year in 2015. People having higher income shop less frequently than those with lower income, but when the former do, they spend more.

 

Around 25-35% of Vietnamese consumers tend to try multiple brands instead of sticking to one/ a few familiar or well-known brands.

 

6. How is ‘e’ commerce affecting the traditional bricks & mortar shop?
 

Bricks & Mortar retailers have to make plan to develop e-commerce channels. Some successful retailers are NguyenKim, thegioididong and FPT.

 

7. Has ‘e’ commerce hit the rural areas?
 

Yes, but still to a very limited extent. Bricks & mortar establishments still dominate the rural market. However, as a result of internet availability, smartphone usage and increasing GDP, we expect that e-commerce will become more popular in rural areas in the near future.

 

8. How is delivery made?
 

Delivery is mainly dependent on a third party’s service.

 

Delivery by motorbikes is the most popular means of delivery thanks to its flexibility and convenience in Vietnam’s narrow streets, small alleyways and dense traffic.

 

Cash on Delivery is still preferable in Vietnam (85% of e-commerce users choose this method).
Although there are many international logistics service providers in Vietnam, local ones are in many cases better choices because they have nationwide coverage, industry understanding and experience, as well as cheaper delivery cost.

 

9. How are return goods handled?
 

Depending on policies of each e-commerce site. For example, returning process can be done by filling an online form, going to the office directly or phone calling. Returnable duration varies by each site, from 07 days to 30 days.

 

Duane Morris logo

 

For further information, please contact:

 

Oliver Massmann, Partner, Duane Morris
omassmann@duanemorris.com