Vietnam's digital economy is experiencing an unparalleled boom, with its e-commerce sector leading the charge. Fueled by a young, tech-savvy population, rapidly increasing internet penetration, and a burgeoning middle class, the country presents an irresistible market for cross-border sellers and foreign direct investors (FDI) looking to tap into Southeast Asia's next big success story. However, this explosive growth comes hand-in-hand with an evolving regulatory landscape designed to formalize, regulate, and safeguard the digital marketplace.

For foreign investors and e-commerce enterprises, understanding these shifts is not just about compliance; it's about identifying strategic advantages and ensuring sustainable growth. At Viettonkin Consulting, we specialize in turning internal expertise into external simplicity, guiding you through the intricacies of Vietnam's legal and business environment. This article delves into the vast opportunities within Vietnam's e-commerce sphere, highlights the pivotal regulatory changes for 2024-2025, and critically examines the ongoing shift from informal household businesses to formal company structures, along with its significant tax implications.

I. Vietnam's Digital Marketplace: A Growth Powerhouse for Cross-Border E-commerce

Vietnam's e-commerce market is on a blistering trajectory. With double-digit annual growth, it consistently outpaces many regional peers, solidifying its position as a top-tier digital economy in ASEAN.

• Massive Digital Adoption: High smartphone penetration and affordable internet access have cultivated a digitally fluent consumer base, comfortable with online shopping.
• Vibrant E-commerce Ecosystem: A proliferation of domestic and international e-commerce platforms (e.g., Shopee, Lazada, Tiki, TikTok Shop) offers diverse channels for reaching millions of consumers.
• Growing Disposable Income: The expanding middle class is driving demand for a wider variety of goods, including international products, creating significant opportunities for cross-border transactions.
• Government Support: The Vietnamese government actively promotes the digital economy, recognizing its potential to drive national economic growth and efficiency.

For cross-border sellers, this translates into a colossal market opportunity to directly access Vietnamese consumers, expand brand presence, and diversify revenue streams. However, to effectively capitalize on this, a clear understanding of the regulatory shifts is indispensable.

II. Navigating the New Regulatory Wave: Key Legal Updates for 2024-2025

The rapid evolution of Vietnam's e-commerce market has prompted the government to introduce a series of new decrees and a forthcoming law, aiming to foster a more transparent, secure, and compliant digital environment. These updates directly impact foreign suppliers and cross-border sellers.

A. Cross-Border E-Invoicing Via Decree 70/2025/ND-CP (Effective June 1, 2025):

A significant step towards standardizing digital transactions, Decree 70/2025/ND-CP extends the scope of e-invoicing obligations to foreign suppliers selling goods or services via e-commerce platforms in Vietnam, even without a local branch. This means:

• Mandatory E-invoice Option: Foreign suppliers must enable the e-invoice option on the platforms they use.
• Compliance with Decree 123/2020/ND-CP: They must adhere to the general provisions for e-invoicing, ensuring accuracy and proper record-keeping.
• E-invoice Timing and Content Rules: Decree 70 specifically outlines the timeframe for issuing invoices based on transaction type (e.g., immediately upon transfer of ownership, completion of services, or within 1 business day after customs clearance for exports). Invoices must contain detailed information, including specifics for cross-border shipping transactions.

💡Implication for FDI: This regulation mandates greater transparency and formalization for foreign entities operating in Vietnam's e-commerce space, bringing them further into the domestic tax and regulatory fold.

B. Platforms Withholding VAT & PIT (Decree 117/2025/ND-CP) (Effective July 1, 2025):

This decree introduces a fundamental shift in tax collection responsibility within the e-commerce ecosystem:

• Platform Responsibility: From July 1, 2025, both domestic and foreign e-commerce platforms will be responsible for deducting, declaring, and paying Value Added Tax (VAT) and Personal Income Tax (PIT) on behalf of individual sellers or business households operating on their platforms.
• Variable Rates: Different VAT and PIT rates will apply based on the type of goods or services sold (e.g., goods, services, transport) and the seller's classification.
• Direct Tax Compliance: This regulation aims to streamline tax collection from the vast number of informal online sellers, ensuring that tax obligations are met directly at the point of sale.

💡Implication for FDI: While this primarily targets Vietnamese individual sellers and household businesses, it signifies a broader governmental drive for tax compliance within e-commerce, creating a more level playing field and indirectly encouraging sellers to formalize their operations (as platforms will implement strict withholding).

C. New E-Customs Integration Decree (By April 1, 2025):

To facilitate faster and more transparent cross-border trade, a draft decree will require customs systems to connect real-time data with e-commerce platforms and logistics wallets.

• Real-time Data Declaration: Cross-border e-commerce orders will mandate real-time data declaration to customs authorities.
• Dual Impact: This poses significant technical challenges for platforms and logistics providers to integrate systems seamlessly. However, it also promises substantial benefits in terms of promoting transparency in cross-border transactions and enabling faster customs clearance, ultimately benefiting the end consumer and efficient logistics.

D. Draft E-Commerce Law (Expected 2025–2026 Promulgation):

A comprehensive new E-Commerce Law is currently in its draft phase, intended to replace the existing Decrees 52/2013 and 85/2021. If promulgated in 2026 as planned, this law will bring sweeping changes:

• MOIT License & Local Presence: Cross-border e-commerce activities will likely require a Ministry of Industry and Trade (MOIT) license, and foreign entities may need to establish a headquarters in Vietnam or authorize a local representative to assume legal responsibility for their operations.
• Strengthened Regulations: The draft law emphasizes:
  • Seller Identification: More stringent requirements for verifying seller identities.
  • Product Transparency: Enhanced rules for clear and accurate product information.
  • Consumer Protection: Stronger mechanisms to protect consumer rights.
  • Handling Violations: Stricter enforcement against intellectual property (IP) infringement and the sale of counterfeit goods, a major concern for international brands.

💡Implication for FDI: This upcoming law underscores Vietnam's commitment to creating a mature and trustworthy e-commerce environment. For serious cross-border sellers and foreign investors planning long-term engagement, establishing a formal local presence and ensuring full compliance with these future regulations will be critical.

E. Domain & User Verification Via Decree 147/2024/ND-CP (From End of 2024):

Aiming to enhance accountability and combat misinformation or illicit activities online:

• Real ID Verification: Regulations will require verification of livestream and business users using real Vietnamese ID.
• Administrative Sanctions: It opens up the right to administrative sanctions, including the revocation of '.vn' domains if copyright infringement or the dissemination of false information is committed.

💡Implication for FDI: This reinforces the need for legitimate, transparent, and legally compliant operations, particularly for foreign businesses utilizing Vietnamese domains or engaging with Vietnamese content creators.

F. Data Protection & Cybersecurity Requirements (Since 2023):

Vietnam has significantly strengthened its data protection and cybersecurity framework, including the Personal Data Protection (PDP) Decree.

• Data Transfer Restrictions & Local Storage: Laws restrict cross-border data transfers and often require domestic storage of personal data.
• Impact on E-commerce Platforms: These regulations directly apply to e-commerce platforms and foreign companies that collect, process, or store personal data of Vietnamese users.

💡Implication for FDI: Foreign e-commerce businesses must meticulously review their data handling practices, ensure compliance with Vietnamese data localization and cross-border transfer rules, and implement robust cybersecurity measures.

III. The Pivotal Shift: From Household Business to Formal Company Structures and Their Tax Implications

One of the most profound, yet often overlooked, shifts within Vietnam's e-commerce landscape is the government's strong encouragement, and increasingly, regulatory push, for informal household businesses to formalize into legally recognized company structures such as Limited Liability Companies (LLCs) or Joint Stock Companies (JSCs). This shift has significant tax implications for foreign investors seeking to navigate this market.

A. Understanding the "Household Business" Model:

Historically, many small-scale Vietnamese online sellers operated as "household businesses." This is an informal legal status characterized by:

• Simpler Registration: Easier to set up with minimal legal requirements.
• Limited Legal Personality: Often no clear distinction between the owner and the business, leading to unlimited personal liability.
• Simplified Tax Obligations: Often subject to a presumptive fixed tax or very basic declaration, typically without formal corporate tax structures.

B. The Drive Towards Formalization:

The Vietnamese government's push for formalization stems from several objectives:

• Enhanced Tax Collection: Bringing more economic activity into the formal tax net.
• Improved Transparency: Better tracking of business operations for statistical and regulatory purposes.
• Fair Competition: Leveling the playing field between formal businesses and informal operators.
• Consumer Protection: Easier enforcement of consumer rights and product quality standards when dealing with formally registered entities.

Decree 117/2025/ND-CP is a direct driver of this formalization. By making e-commerce platforms responsible for withholding VAT and PIT from individual sellers and household businesses, the government is essentially raising the compliance burden and reducing the "informal advantage". For household businesses seeking to scale, grow, and operate professionally on major platforms, the benefits of formalization now significantly outweigh the perceived simplicity of the informal model.

C. Tax Implications of the Shift: Household Business vs. Formal Company (LLC/JSC)

The tax landscape changes dramatically when a household business transitions to a formal company.

• For Household Businesses (Pre-Formalization, Post-July 2025):
  
  • They will experience direct withholding of VAT and PIT by e-commerce platforms as mandated by Decree 117/2025/ND-CP. This means a portion of their earnings will be automatically deducted for tax purposes at source. The specific rates depend on their industry/product.
  • This system, while streamlining collection for the state, reduces the immediate cash flow for the household business and makes their tax obligations more explicit. For many, it will be the impetus to consider formalizing.

• For Formal Companies (LLC or JSC):
  
  • Corporate Income Tax (CIT): Instead of PIT on individual income or presumptive taxes, companies are subject to Corporate Income Tax (standard rate typically 20%). However, they are also eligible for various CIT incentives, such as the 3-year CIT exemption for new SMEs (under Resolution 198/2025/QH15) or preferential rates for encouraged sectors/locations, which informal household businesses cannot access.
  • Value Added Tax (VAT): Companies apply VAT based on a more structured input/output tax system, allowing for VAT credits on purchases. This is more complex than the direct withholding for household businesses but offers greater financial management flexibility.
  • Business License Tax (BLT): Companies are subject to annual Business License Tax, the rate of which depends on their charter capital. However, the planned abolition of business license tax collection starting January 1, 2026, will further simplify compliance for newly formalized entities.
  • Formal Accounting & Auditing: Companies are required to maintain formal accounting records and, depending on size, undergo audits. This increases administrative costs but ensures transparency and financial integrity.

The Strategic Imperative for Foreign Investors:

For foreign investors planning a serious and sustainable presence in Vietnam's e-commerce market, establishing a Limited Liability Company (LLC) or Joint Stock Company (JSC) is not merely a formality but a strategic necessity. It provides:

• Limited Liability Protection: Essential separation of personal and business assets.
• Credibility & Professionalism: Key for attracting local partners, securing better platform terms, and building consumer trust.
• Scalability & Funding: Easier to raise capital, expand operations, and enter new markets.
• Access to Incentives: Eligibility for various tax incentives and other government support policies available only to formalized businesses.
• Clear Legal Framework: Operating within a recognized legal structure simplifies compliance with the evolving e-commerce regulations, making it easier to integrate with e-invoicing, e-customs, and data protection requirements.

IV. Opportunities and Challenges for Cross-Border Sellers in Vietnam's E-commerce Market

A. Unprecedented Opportunities:

• Massive Untapped Potential: Despite rapid growth, per capita e-commerce spending in Vietnam still has significant room for expansion compared to developed markets.
• Digital-First Consumer Base: Vietnamese consumers are highly engaged online, responsive to digital marketing, and increasingly accustomed to cross-border purchases.
• Governmental Support for Digital Economy: Policies and infrastructure investments continuously improve the operating environment for digital businesses.
• Diverse Product Demand: From fashion and cosmetics to electronics and specialized goods, a wide range of imported products are in high demand.

B. Key Challenges to Navigate:

• Evolving Regulatory Landscape: Staying updated with new decrees (70/2025, 117/2025, e-customs) and the upcoming E-Commerce Law requires constant vigilance and expert guidance.
• Compliance Burden: Managing e-invoicing, tax withholding rules (for platforms), data protection, and real ID verification adds layers of complexity.
• Intellectual Property (IP) Protection: While strengthening, IP infringement and counterfeit goods remain concerns that cross-border sellers must proactively address.
• Logistics & Fulfillment: Efficient cross-border logistics, last-mile delivery, and reverse logistics require robust solutions.
• Localization: Effective market penetration demands deep understanding of local consumer preferences, payment methods, and cultural nuances.
• Competition: The market is increasingly competitive, with both domestic and international players vying for market share.

V. Partnering for E-commerce Success: How Viettonkin Consulting Simplifies Your Journey

The "e-commerce explosion" in Vietnam presents a goldmine of opportunities, but successfully navigating its dynamic regulatory environment, particularly for cross-border sellers and foreign direct investors, requires specialized expertise. This is where Viettonkin Consulting becomes your invaluable partner.

We provide comprehensive, end-to-end solutions designed to turn internal legal and business complexities into external simplicity for your e-commerce venture in Vietnam:

• Market Entry Strategy & Company Formation: Guiding you through the optimal setup, including the formalization from potential informal operations into a robust LLC or JSC structure.
• E-commerce Licensing & Compliance: Ensuring adherence to Decree 70/2025 (e-invoicing), Decree 147/2024 (user verification), and preparing for the new E-Commerce Law.
• Tax Advisory & Structuring: Expert advice on VAT, PIT, CIT, and leveraging available tax incentives, including the implications of Decree 117/2025 on platform withholding and the benefits of formalization.
• IP Protection & Enforcement: Strategies to safeguard your intellectual property in the Vietnamese digital space.
• Data Protection & Cybersecurity Compliance: Ensuring your data handling practices align with Vietnamese laws on personal data protection and cybersecurity.
• Local Representative & Compliance Support: Acting as your trusted local representative or providing ongoing compliance services.

Our team of seasoned legal and business consultants possesses deep local knowledge combined with international best practices, ensuring your cross-border e-commerce operations in Vietnam are not only compliant but also strategically positioned for exponential growth.

VI. Conclusion: Seizing Vietnam's Digital Future Responsibly

Vietnam’s e-commerce market offers undeniable potential for cross-border sellers and foreign direct investors in 2024–25 and beyond. Its rapid growth, digital-savvy population, and a government committed to fostering the digital economy create an attractive landscape. However, the concurrent introduction of new regulations – from e-invoicing and platform tax withholding to stricter customs integration and a comprehensive new E-Commerce Law – underscores a maturing market that demands serious, compliant, and formally structured engagement.

Crucially, the clear shift away from informal household businesses towards formal company structures (LLC/JSC), driven partly by new tax withholding mechanisms, presents a pivotal moment. For foreign investors, embracing this formalization is not a hurdle, but a strategic advantage – unlocking greater stability, credibility, scalability, and access to significant tax incentives.

By proactively understanding and adapting to these legislative changes, and by partnering with experienced local advisors like Viettonkin Consulting, cross-border sellers can confidently navigate Vietnam's exciting e-commerce explosion, turning regulatory complexity into a clear pathway for sustainable success.

Ready to launch or expand your cross-border e-commerce venture in Vietnam with confidence and full compliance?

Let Viettonkin Consulting simplify your journey. We translate Vietnam's legal expertise into actionable strategies, ensuring your digital business thrives in this dynamic market.