Facebook customers will have to pay an additional 5% value-added tax (VAT) when running ads in Vietnam, starting from June 1.

The move has just been officially announced on the “Business Help Center” page of Meta - Facebook's parent company after assuring the Vietnamese Government that it will fulfill its tax obligations.

“The additional 5% VAT is added whenever you’re charged for your ads, regardless of whether you’re buying Facebook ads for business or personal purposes,” the announcement stated.

Meta recommended that customers add a Vietnamese tax code in their payment settings, although it’s not required to start running ads on Facebook.

An ad runs on Facebook in Vietnam. Screenshot: Nguyen Ngan

“When you have registered for VAT and provided a tax code, the information will be displayed on the customer’s advertising receipt. This can help them get a partial refund of VAT paid under the guidance of the General Department of Taxation,” Meta said.

However, Facebook noted that the company is unable to advise advertisers further on tax matters. “If you have tax questions, we recommend that you contact your tax advisor or local tax authority,” the notice read.

According to Facebook, VAT will be collected in two ways. With the automatic payment option, a 5% tax will be charged before the ad goes live. Users will have to pay extra for an advertising plan on the platform.

If an advertiser chooses to pay manually, VAT is calculated based on the actual rate, depending on the balance in the ad account, Facebook said.

Meta executives on May 20 told Prime Minister Pham Minh Chinh during his working visit to the US that the company would register and pay tax as a foreign contractor doing business in Vietnam.

Previously, in April, Meta had a meeting with the General Department of Taxation to clarify the implementation of Circular 80 (on the mechanism of registration, declaration and payment of tax for foreign contractors) in Vietnam.

Meta is committed to registering, declaring and paying Foreign Contractor Tax in accordance with the Circular. It will also provide necessary information to its advertisers and customers to ensure compliance with tax declaration and payment.

The move is a specific step for Meta to comply with its commitment.  

The Vietnamese Government has been pressing for cyber behemoths like Meta and Google to be properly taxed, pointing out that they account for around 70% of the online advertising industry but employ various methods to avoid paying taxes. Between 2018 and last year, they charged cross-border platforms a total of VND5 trillion (US$218.5 million).