Under the impact of Covid 19, consumers have changed their shopping habits, switching from traditional shopping to online shopping. In Vietnam, online shopping on e-commerce sites is becoming more and more popular and receiving much attention from people. Therefore, more and more organizations and individuals have turned to online business. They sell and promote their products on e-commerce platforms. The article will provide some legal issues related to e-commerce activities.
The definition of online business
Online business (or E-commerce activity) means conducting part or the whole of the process of commercial activity by electronic means connected to the Internet, mobile telecommunications network or other open networks.
In accordance with Article 25 Decree No 52/2013/ND-CP on E-commerce, Forms of organization of e-commerce activities include;
Sales e-commerce website is an e-commerce website developed by traders, organizations or individuals by themselves to serve their commercial promotion, sales or service provision.
E-commerce service provision website is an e-commerce website developed by traders or organizations to provide an environment for other traders, organizations or individuals to conduct their commercial activities. The e-commerce service provision website is of the following types:
- E-commerce trading floor;
- Online auction website;
- Online promotion website;
- Other types of website as stipulated by the Ministry of Industry and Trade.
Subjects of e-commerce activities, as provided in Article 23 Decree No 52/2013/ND-CP include:
“1. Traders, organizations or individuals that develop e-commerce websites by themselves to serve their commercial promotion, sales or service provision (owners of sales e-commerce websites).
2. Traders, organizations or individuals that develop e-commerce websites to provide an environment for other traders, organizations or individuals to conduct their commercial promotion, sales or service provision (traders or organizations providing e-commerce services).
3. Traders, organizations or individuals that use websites of traders or organizations providing e-commerce services to serve their commercial promotion, sales or service provision (sellers).
4. Traders, organizations or individuals that purchase goods or services on sales e-commerce websites and e-commerce service provision websites (customers).
5. Traders or organizations providing technical infrastructure for owners of sales e-commerce websites and for traders and organizations providing e-commerce services (traders or organizations providing infrastructure).
6. Traders, organizations or individuals that use electronic equipment connected to other networks for carrying out commercial activities.”
In Vietnam today, most of the activities of buying and selling goods online are conducted through e-commerce platforms because these platforms allow traders, organizations and individuals who are not website owners can carry out part or the whole process of buying and selling goods and services on it.
Conditions for e-commerce business
Depeding on Forms of organization of e-commerce activities, the conditions will be different.
a. Conditions for E-commerce service provision website
Legal grounds:
- Article 54 Decree No 52/2013/ND-CP;
- Article 10, 11 Decree No 08/2013/ND-CP
Traders and organizations may set up e-commerce service provision websites specified in Sections 2, 3 and 4, Chapter III of this Decree when fully satisfying the following conditions:
1. The trader or organization shall be established under regulations of law
2. Having a service provision plan clearly stating the following:
+ Model of organization of operations, including service provision, promotion and marketing both online and offline;
+ Rights and responsibilities of the trader or organization providing e-commerce services and service users.
3. Having registered for setting up e-commerce service provision websites and having their registrations certified by the Ministry of Industry and Trade under Articles 55 and 58 of this Decree.
The registration with the Ministry of Industry and Trade in Clause 3 above is conducted in the form of online declaration on the e-commerce management portal at www.online.gov.vn
b. Conditions for Sales e-commerce website
Legal grounds:
- Article 52 Decree No 52/2013/ND-CP;
- Article 10, 11 Decree No 08/2013/ND-CP
1. The trader, organization or individual that is issued with personal tax identification number
2. Having notified the Ministry of Industry and Trade of the set-up of sales e-commerce websites under Article 53 of this Decree.
The notification to the Ministry of Industry and Trade in Clause 2 above is implemmeted online on the e-commerce management portal at www.online.gov.vn.
Frequently asked questions
- Question: Does an online business need capital?
Answer: Any business activity requires capital investment to run the business
- Question: Is online business allowed to franchise?
Answer: Online business or e-commerce activities are just a form to carry out the purchase and sale of goods, provision of services, and trade promotion based on the internet, without affecting the franchising.
As stipulated in Article 284 Law on Commerce 2015:
“Commercial franchise means a commercial activity whereby franchisors permit and require franchisees to undertake by themselves to purchase or sell goods or provide services on the following conditions:
1. The purchase or sale of goods or provision of services shall be conducted in accordance with methods of business organization prescribed by franchisors and associated with the franchisors’ trademarks, trade names, business knows-how, business slogans, business logos and advertisements.
2. Franchisors shall be entitled to supervise and assist franchisees in conducting their business activities.”
-
Question: Does an online business need to be registered?
Answer: If the subject conduct business activities is an organization, the enterprise registration procedure must be carried out. In case an individual conduct the business, he/she must register for a personal tax identification number.
Besides, according to Article 03 of Decree No. 39/2007/ND-CP, individuals who do independent and regular commercial activities, work without fixed points, etc. are not required to register for business.
Thus, according to the above-mentioned law, online sellers themselves do not have to register for a business license. The responsibility for registration belongs to the enterprise operating the website/e-commerce platform.
-
Question: Does an online business have to pay taxes?
Answer:
For enterprises that carry out business activities and have taxable incomes under the provisions Law on enterprise income tax, they are obliged to pay tax.
For individuals, in accordance with Point dd Clause 1 Article 2 Circular No 40/2021/TT-BTC thì individuals conduct “E-commerce, including individuals earning incomes from provision of digital products or services as prescribed by e-commerce laws.” are obliged to pay tax.
Above are the basic information regarding Some legal issues related to online business. Ngoc Phu Law Firm specializes in providing comprehensive legal services professionally related to Domestic and Foreign Investment; Enterprise; Real estate; Intellectual Property; Labor; Consulting, drafting, negotiating and supporting the signing of commercial contracts, domestic and foreign service contracts; Consulting and supporting the process of applying for all kinds of sub-licenses,.. With a team of profession lawyers and well-trained specialists, allow us to ease the burden by doing the paperwork for you.
In case where you require further information, please don’t hesitate to contact us for timely advice and support.
