COMPARATION OF INTERNET TAXATION IN US AND VIETNAM

Global communication work (internet) is one of the greatest invention in the field of
information technology has begin and continues strongly widely develop. The actuality
proved that the earth is getting smaller thanks to the Internet, which has made everything
near and fast to reach. It is a significant challenge for the world's. Nowaday, globalization
is expanding and people worldwide are communicating as never before with the help of
the Internet.
In the United States, taxation is a complex system which may involve payment to many
different levels of government and many methods of taxation. There are about 14-20
different types of taxes. In addition to taxes on income, capital, property, real estate
purchase, there are taxes on Internet access, oil, unemployment, health insurance. When
necessary, the state will proceed to vote on the decision to apply a tax or increase existing
taxes.
There are many conceptual issues involved in the determination of which of several
jurisdictions have the authority to tax the Internet, or transactions on it, in some way.
Internet taxation has essentially been banned in the United States since 1998, except for
those jurisdictions that were grandfathered under existing federal law. Most of which
involves Internet access taxes, franchise taxes, and telecommunications taxes, although a
smattering of other taxes currently exist
Internet access taxes normally take the form of taxation on Internet service provider (ISP)
access charges. ISPs levy these charges on users and they are considered service charges.
There are many conceptual issues involved in the determination of which of several
jurisdictions have the authority to tax the Internet, or transactions on it, in some way.
Internet taxation has essentially been banned in the United States since 1998, except for
those jurisdictions that were grandfathered under existing federal law. Most of which
involves Internet access taxes, franchise taxes, and telecommunications taxes, although a
smattering of other taxes currently exist.
The nature of internet-based transactions is such that difficulties will inevitably arise in
detecting the existence of transactions, and if this is achieved, in establishing whether or
not the authority has jurisdiction to levy tax on the transaction.

1
Sen. George Allen (R., Va.), who co-sponsored the legislation noted: "I'm glad to see the
majority of Congress stands with those who want to see the Internet continue to grow and
flourish as a tool for information, opportunity, prosperity and commerce."
December, 2004, George W. Bush signed the bill into law and the move was welcomed
by internet service providers such as America Online and Time Warner, as well as by
representatives of the telecommunications industry. “With forward-looking policies that
encourage real competition, like the Internet tax moratorium, consumers and the nation's
economy will benefit from increased investment and innovation in the telecom sector,”
enthused Walter B. McCormick, Jr., President and CEO of the United States Telecom
Association, shortly after Mr Bush signed the bill.
However, not everyone was happy with the access tax ban on internet services, especially
municipal and state governments, which were particularly upset over the expanded
provisions covering broadband services.
In February 2007, legislation was introduced into the House of Representatives to
permanently extend the moratorium on internet access taxes and duplicative taxes on
internet commerce.
Americans across the country utilize the Internet for communication, commerce,
business, education and research because of the tremendous value it brings to all aspects
of lives, we need to encourage its usage and do everything we can to ensure that Internet
access is universal.
A member of the House Energy and Commerce Subcommittee on Telecommunications
and the Internet said that the passage of this legislation will ensure, once and for all, that
the growth of Internet access and e-commerce will not be hampered by unwarranted
taxation.
According to a report in 2006 by the Pew Internet and American Life Project
demonstrated that 73% of those polled were Internet users, up from 66% in a similar
2005 survey, while in 2006 alone, online retail exceeded $100 billion, increasing 24%
over 2005. However, Internet usage still lags behind in rural and lower income areas of
the US, and the country has fallen from 4th to 16th in broadband penetration worldwide
since 2001 and in order to reverse this trend, American’s Government need to ensure that

2
access costs are kept to a minimum. Prohibiting unnecessary access taxes will help
accomplish this goal,"
The definition of 'Internet access' to ensure that a consumer's connection to the Internet,
including email and instant messaging, remained tax-free.
The moratorium on the imposition of Internet access taxes could allow an Internet
Service Provider to bundle Internet access with other services and make them all tax-free.
However, the Senators think that it could harm the traditional tax base of state and local
governments and the states and localities could lose billions of dollars in revenue as
telephone services migrated to the Internet.
As the Internet continues to grow and more services migrate to the Internet, it makes
sense to close that loophole and define Internet access exclusively as the connection
between a consumer and the Internet Service provider. Such clarity will continue to
ensure that Internet access is tax free, while also ensuring state and local governments do
not have to come up with new - and potentially more burdensome - sources of revenue to
pay for teachers, firefighters and health care services etc
With forward-looking policies that encourage real competition, like the Internet tax
moratorium, consumers and the nation's economy will benefit from increased investment
and innovation in the telecom sector
As finally passed, the Internet Tax Freedom Act of 2007 extended the moratorium until
2014.
In the current business environment, the application of the Internet is indispensable.
Internet has shown attached to the social life according to that "anytime-anywhere" for
most of countries. The concept of "Knowledge exponential" has been applied to the
digital business. With the development of Internet, electronic commerce is formed. Many
businesses operation has been strong, no longer limited to the areas within which
development globally; no longer restricted within the narrow lines that open width on all
trades.
Vietnam is a developing country. It has been connected to the Internet since 1997 and has
increased the number of subscribers in the recent past. Based on the experience of other
international donors, the EC development projects in Vietnam so far mainly focused on
how to support the final step to e-commerce: Increase the number of computer users

3
providing infrastructure and Internet banking, helps companies use the Internet as a new
form of communication and advice to legislators promulgate rules and regulations to
facilitate the development of electronic commerce.
March 2006 Law on electronic transactions to take effect. Online transactions have
become common components of all social and economic. Transactions between business
to business (B2B) e-commerce and in the majority in Vietnam, also uses Internet
standards, as defined in the world.
According to the statistics of the data center international Internet World Stats, Vietnam
is ranked 6 in Asia, people on the Internet. Nationality is also home to keep troops in
South East Asia Southern Asia, after Indonesia (25 million), while in terms of growth
rate, Vietnam than Pakistan (133,900 users in 2000 and is now 17.5 million).

Internet using people in ten countries of Asia

Source: According to the statistics of the data center international
Internet World Stats
The lead of continents is China with 253 million users, followed by Japan and the India
with the corresponding figures are 94 million and 60 million. Timor-Leste has the lowest
user: 1,200 / 1.1 million people. Cambodia has 70,000 people have opportunities for
exposure to the Internet in Laos is 100,000.
With the signal of the economy in general and business telecommunications in particular,
research hãng Business Monitor International (UK) last year predicted Vietnam will
reach 31.5 million people connected in 2011 . Internet service Yahoo also recently

4
affirmed that Vietnam is targeting a number of them in South-Eastern Asia and want to
give 30 million users in 2010.
According to the Vietnam Internet Network Information Centre (VNNIC), up to now,
there are 10.829 websites with the Vietnam domain names. Number of Internet users in
Vietnam has increased to over 7, 5 million with the rate of users per capita about 9, 1%.
Total International connection bandwidth of Vietnam is 2, 3 Gbps in which total
International connection bandwidth of VNPT/VNN is 1, 8 Gpbs, accounted for 78, 5%
total capacity of Vietnam.

19%

1% Internet cafe & wifi

Mobile
2%
house freend
Office
55%
Shool & Library
20%
at home

2%

Source: Yahoo and TNS

At present, there are some Internet Service Providers in Vietnam such as:
• VNPT (Vietnam Posts and Telecommunications Group)
• Viettel
• FPT
• NetNam
• EVNTelecom
• SPT
In recent years, Internet Service Providers are committed to improving the service type.
But rates are still high service compared to other countries in the region. The charges

5
announced reduction of the ISP, is essentially an art of advertising. Exclusivity in
business, no competition was hindering development. State monopolies have been turned
into abuse and monopoly of the business.
Internet enabling enterprises put more science into management: Background for Internet
technology is helping managers exploit the greater volume of data to make decisions that
are smarter, and develop the insight to create competitive advantages and new business
models.
Internet to create businesses from information: The source of accumulated data collected
by a number of systems in large organizations or integrated from many places on the
Web are the original raw material for information on business opportunities.
How it can be taxed in a manner that ensures such commerce will not be subject to
special, multiple or discriminatory taxes? It is difficult to do it in Vietnam. Vietnam
should study electronic tax issues from America to choose a suitable way.
There are many conceptual issues involved in the determination of which of several
jurisdictions have the authority to tax the Internet, or transactions on it in Vietnam. Most
of which involves Internet and telecommunications taxes, although a smattering of other
taxes currently exist.
Instead, the preference has been to work towards a means by which the current
international system of taxation can be adapted to deal with the electronic commerce
environment in an effective manner.