SCHOOL OF Western Sydney University Vietnam

ASSIGNMENT COVER SHEET

STUDENT DETAILS

Student name: Nguyễn Bảo Ngọc Student ID number: B1112015139

UNIT AND TUTORIAL DETAILS

Unit name: Business Law Unit number: T321WSB5

Tutorial group: Tutorial day and time:
Lecturer or Tutor name: James Weisman & Ha Thi Thanh Binh

ASSIGNMENT DETAILS

Title: Essay: Problem Question

Length: 1619 words Due date: 5/12/2021 Date submitted: 4/1/2021
Home campus (where you are enrolled): Vietnam

DECLARATION

I hold a copy of this assignment if the original is lost or damaged.

I hereby certify that no part of this assignment or product has been copied from any other student’s work or from
any other source except where due acknowledgement is made in the assignment.
I hereby certify that no part of this assignment or product has been submitted by me in another (previous or
current) assessment, except where appropriately referenced, and with prior permission from the Lecturer /
Tutor / Unit Coordinator for this unit.
No part of the assignment/product has been written/produced for me by any other person except where
collaboration has been authorised by the Lecturer / Tutor /Unit Coordinator concerned.
I am aware that this work will be reproduced and submitted to plagiarism detection software programs for the
purpose of detecting possible plagiarism (which may retain a copy on its database for future plagiarism
checking).

Student’s signature: Nguyễn Bảo Ngọc

Table of Content
1. Introduction…………………………………………………………………………….
2. Implementation…………………………………………………………………………
2.1 How many steps should be taken to be legal……………………………………….
2.2 Determine the types of business……………………………………………………
2.3 Procedures for registration of online clothes shop…………………………………
2.4 Determination of the tax to be paid………………………………………………...
2.5 Administrative sanctions…………………………………………………………...
3. Conclusion……………………………………………………………………………...
How to operate an online clothes shop in
Vietnam?
1. Introduction

The growth of online shopping has emerged as a trend recently; people have tended to buy online
instead of going out for shopping since the Covid-19 pandemic (Malie, 2021). However, building
an online business confronts many obstacles to the law. Additionally, the clothes market in
Vietnam has potential. Still, with the tight budget, the company can choose to sell online rather
than open offline stores because it costs a considerable budget. Therefore, the business should
understand and comply with the commercial law to be legal. This essay will offer
recommendations for operating an online shop.

2. Implementation

2. 1 How many steps should be taken to be legal

There are steps to identifying what the company should implement: Determine the type of
business. From there, determine whether to register a business or not. Then carry out business
registration procedures (if any) a business or not. Next is determining the taxes to be paid.
Finally, the company should recognize administrative sanctions to avoid.

2. 2 Determine the types of business

Whether an online clothes shop needs a business license or not, the company still needs to
comply with the requirements for information and quality of goods/services; fulfill tax
obligations; compliance with intellectual property rights; ensure authenticity and transparency
under Article 37 of Decree 52/2013/ND-CP.

Case 1: Selling goods online with a small scale

When doing business and selling online on a small scale, in a spontaneous form, almost every
individual/owner of an online shop does not register for a business according to the Pursuant to
Clause 1, Article 3 of Decree 39/2007/ND-CP stipulating on individuals conducting commercial
activities who are not traders and do not have to register for business, including individuals
conducting activities. It states that "Commercial activities independently, regularly without other
business registration.". However, in the case of an inspection agency, these subjects may be
administratively sanctioned, considered tax evasion, or unlicensed business activities. Therefore,
registering to establish an individual household business or a company is mandatory and
necessary for you to sell online for a long time.

Case 2: Register an individual business household to sell online

The type of individual business household will be suitable for small scale, few employees, few
goods and no branches. Individual business households operate under the management of tax
authorities and are obliged to pay flat tax annually, according to the estimated revenue
announced by the tax authorities.

Case 3: Establishing a company to sell online

With an extensive business scale, investing in professional online sales or using a website, e-
commerce sales page, you should establish a company because of the advantages in terms of
business operation management, and at the same time avoid the Sanctions should not be there.
According to Article 13 of Circular 47/2014/TT-BCT, traders/organizations operating in the field
of trade promotion have websites providing one of the following services:

 Online promotion;

 E-commerce trading floor;

 Online Auction

Then, you must conduct business registration and register in the form of an electronic trading
floor with the Ministry of Industry and Trade.

2.3 Procedures for Registration of online clothes shop

2.3.1 Registration of establishment of an individual business household

Clause 1, Article 71 of Decree 78/2015 ND-CP on business registration stipulates the
application, order, and procedures for business household registration as follows:

Contents of requesting business registration include:

a) Name of business household, address of business location; phone number, fax number, email
(if any);

b) Line of business;

c) Amount of business capital;

d) Number of employees;

e) Full name, signature, residential address, number and date of issue of valid citizen
identification card or people's identity card or passport of individuals who establish business
households for business households' groups of individuals, individuals, for household businesses
established by individuals, or representatives of households, for business households established
by households.

2.3.2. Registration of establishment of a company or enterprise

A company or an enterprise is a large business that incurs tax obligations, so the establishment
procedures are more complicated than those of an individual business household.

To set up a business, you need to meet all the conditions on the legal representative, regulations
on a business name, head office address, business lines, and charter capital.

Clause 1, Article 26 of the Commercial Law No 59/2020/QH14

An enterprise founder or an authorized person shall register an enterprise with the business
registration authority by the following methods:

a) Register the business directly at the business registration agency;

b) Business registration via postal service;

c) Enterprise registration via an electronic information network.

2.4 Determination of the tax to be paid

First, the company will have to register a personal tax identification number at the tax office of
the district where the shop is located, according to the procedures specified in Clause 3, Article
5, Circular 80/2012/TT-BTC on guidance on Tax Administration Law on tax registration:

Tax registration dossiers for taxpayers being business households and individuals

- A tax registration declaration, made according to form 03-DK-TCT issued together with
this Circular;

- A copy that does not require authentication of the Business Registration Certificate (if
any);

A copy that does not require authentication of a National ID card, military ID card, or
passport.

Business households and individuals may only register their business at one location. The
household business, personal business regular use for more than ten employees, must switch to
operate in the form of business and make business registration under the provisions of Decree
No. 43/2010 / ND-CP of the Government.

Clause 1, Article 8, Circular 80/2012/TT-BTC stated that:

"The tax authority is responsible for granting tax registration certificates within 03 (three)
working days for tax registration documents from the date of receipt of complete tax registration
dossiers."

After receiving the tax code, you will have to follow the process of notifying the sales e-
commerce website according to the notification process in Article 9, Circular 47/2014/TT-BCT:
For business activities, the company will have to pay license tax, flat tax (if the turnover is over
100 million VND/year).

Regarding license tax: According to the provisions of the consolidated document 33/VBHN-
BTC, there are six levels of license tax.

An about flat tax (PIT and VAT): If your revenue is over 100 million VND/year.

According to the guidance in Article 2 of Circular 92/2015/TT-BTC guiding the implementation

of value-added tax and personal income tax for resident individuals conducting business
activities; guiding the implementation of any amendments and supplements to personal income
tax specified in the Law amending and supplementing several articles of the Tax Laws
71/2014/QH13 and Decree 12/2015/ND-CP details the implementation of the Law amending and
supplementing several articles of the Law on Taxation and amending and supplementing many
articles of the Tax Decrees issued by the Minister of Finance as follow:

2.4.1. Principles of application

a) Business individuals paying tax according to the flat method (from now on referred to as flat
taxpayers) are business individuals that generate revenue from trading in goods and services in
all fields and industries. Production and business, except for business individuals as guided in
Articles 3, 4, and 5 of this Circular.

b) For flat taxpayers, a turnover of 100 million VND/year or less to determine that the individual
is not required to pay value-added tax or is not required to pay personal income tax is the
revenue for which personal income tax is calculated—a multiplier of the year.

c) In case an individual does business in the form of a group of individuals or households, the
turnover rate of VND 100 million/year or less is used to determine that the individual is not
required to pay value-added tax and is not required to pay personal income tax. The individual
determines for one (01) sole representative in the tax year.

d) A business individual who is a non-resident but has a fixed business location in the
Vietnamese territory shall declare tax as if a business individual is a resident.
2.4.2. Tax bases

2.4.2.1 Tax rate on sales

The tax rate calculated on turnover includes the rate of value-added tax and the rate of personal
income tax applicable to each business field as follows:

- Distribution and supply of goods: the value-added tax rate is 1%; the personal income tax rate
is 0.5%.

2.4.2.2 Determination of payable tax amount

Amount of VAT payable = Revenue subject to VAT x VAT rate

Amount of PIT payable = Revenue subject to PIT x PIT rate

Inside:

- Revenue is subject to value-added tax and revenue subject to personal income tax as guided at
Point a, Clause 2 of this Article.

- Value-added tax rate and personal income tax rate as guided at Point b, Clause 2 of this Article.

Because the company sells clothes, it will be in the case of distribution and supply of goods; the
VAT rate is 1%, the PIT rate is 0.5%.

2.5 Administrative sanctions

The license is essential for operating the business legally because doing business in the form of
an enterprise without registering the establishment of an enterprise shall be subject to a fine
ranging from VND 20,000,000 to VND 30,000,000 according to Point C, Clause 4, Article 28
Enterprise Law No 59/2020/QH14.

Besides, the business can be fined if they ignore precautions when selling clothes online in other
countries. For Business License: A fine ranging from VND 10,000,000 to VND 15,000,000 will
be imposed for trading goods and services in conditional business lines without a business
license as prescribed in Point a, Clause 3, Article 6 of Decree 98/2020/NĐ-CP.

3.Conclusion

All suggestions about steps need to be taken before establishing a business. These
recommendations are based on Vietnamese Laws such as enterprise and tax laws. The essay will
help the company avoid illegal violations to thrive, which comply firmly with laws in Vietnam. 

Reference list
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