Regarding tax management for household businesses and individual entrepreneurs, the General Department of Taxation has discovered instances of businesses exploiting the household business model to issue fictitious invoices in order to inflate input costs. To address this issue, tax authorities are strengthening risk management measures and improving taxpayer compliance.
Many businesses exploit household businesses as a tool to evade taxes.
The General Department of Taxation acknowledges that the private sector is developing strongly, contributing to job creation and increased revenue for the state budget. However, compliance with tax laws remains limited in many areas.
However, this has led to a situation where businesses use household businesses as a front to evade taxes, while some household businesses with large revenues use multiple invoices to inflate input costs. This requires strengthening management, minimizing fraud and tax evasion, especially by businesses masquerading as household businesses, and improving tax compliance management.
During an audit of transactions related to cassava starch, tax authorities discovered numerous cases of fictitious invoice issuance. Data from the General Department of Taxation shows the following:
- A total of 3,1 million households and individual businesses nationwide.
- 1,9 million households have a fixed business location.
- 1,8 million households under the contract system and 90 households registered under the declaration system.
- In addition, there are:
- 74,8 individuals registered for tax based on transactions they had made.
- 77,7 individuals in the property rental sector.
- One million individuals file and pay taxes through activities such as lotteries, insurance, and multi-level marketing.
- In addition, there are approximately 29 million individuals with income, of whom about 7 million are eligible for tax deductions.
The tax authorities are stepping up measures to tighten management.
Although most large-scale businesses have switched to using electronic invoices and filing taxes, however... approximately 90% of individual business households, without using invoices or sales receipts, and usually Paying taxes using the lump-sum method.This leads to inaccurate revenue and tax figures, resulting in losses for the state budget.
Therefore, the tax sector is developing a compliance model to implement effective compliance measures, including Propaganda, education, and criminal prosecution.
The business compliance risk management program establishes a system to identify risks and assess hazards associated with timely and accurate tax registration, declaration, and payment. This model is divided into several segments, identifying key risks for each segment, determining the main causes of non-compliance within each segment, and then implementing appropriate management measures. The goal is to promote voluntary compliance from taxpayers.
Steps for assessing and classifying taxpayer compliance levels.
The compliance model has six specific steps:
- Propaganda and education To raise awareness of tax compliance obligations and encourage obtaining invoices when purchasing goods and services.
- Facilitate This facilitates the registration, declaration, and payment of taxes.
- Remind taxpayers consequence Legal measures, including penalties and criminal prosecution, for tax evasion and the use of illegal invoices.
- Announced information about taxpayers violate tax laws or absconding from the business address.
- Implement tax return form This form is pre-filled for individuals to self-declare their taxes to the tax authorities.
- Complete basis data Regarding personal and identity information of business owners, the aim is to enhance the effectiveness of tax compliance management for all taxpayers, including business households and individual business owners.
To avoid tax risks
To avoid falling into a similar situation, individual business owners need to take the following measures:
- Understand the legal regulations: Learn and understand the tax regulations for self-employed individuals.
- Register for taxes on time: Make sure to register for tax purposes as soon as you start your business to avoid unnecessary penalties.
- Transparent financial management: Record and manage income and expenses transparently and accurately.
Tax expert advice: Consult with tax experts to ensure compliance and optimize business benefits.
Types of income that are subject to taxation.
- Income from wages and salaries
- Income from capital investments
- Income from capital gains
- Income from the transfer of real estate
- Income from lottery winnings
- Income from royalties
- Income from franchising
- Income from inheritance
- Income from receiving gifts
Improving the efficiency of state tax administration plays a crucial role in requiring individuals and organizations to be transparent in declaring their income and other sources of income. Simultaneously, it ensures that all income sources comply with the law, thereby strengthening fairness and transparency in society. Furthermore, when citizens and organizations fulfill their tax obligations, they contribute to economic and social development.
Expert support
Consult with Expertis tax experts. to protect Protect your business and avoid wasting time on unnecessary tax and legal risks. If you need support and advice, please contact us. Contact Expertis Audit and Consulting Company immediately.We are always ready to help you resolve any tax and financial-related issues.