This article will cover the following topics:
- What bank transaction data do banks provide to the tax authorities?
- The process for providing bank transaction data.
- How do tax authorities use information about bank transactions?
- What should organizations and individuals do to prevent risks?
Decree 126/2020/ND-CP, effective from December 5, 2020, stipulates that commercial banks must provide detailed information on banking transactions of organizations and individuals who are taxpayers, as prescribed by law.
Decree 126/2020/ND-CP allows the tax authorities to access information on account balances and transaction details of organizations and individuals – a special tax management tool, particularly for collecting e-commerce taxes.
1. What bank transaction data do banks provide to the tax authorities?
Commercial banks are responsible for providing the tax authorities with information about taxpayers' payment accounts opened at the bank as follows:
i) Upon request from the tax authorities, commercial banks shall provide payment account information for each taxpayer, including: account holder's name, account number according to the Tax Identification Number issued by the tax authorities, account opening date, and account closing date.
ii) The provision of account information under point (a) of this clause shall be made for the first time within 90 days from the effective date of this Decree. Updates to account information shall be made monthly within the 10th day of the following month. The information shall be provided electronically.
iii) Commercial banks provide Transaction information through the account, account balance, transaction data At the request of the head of the tax administration agency, for the purpose of inspection and verification to determine tax obligations and to implement coercive measures to enforce administrative decisions on tax management in accordance with tax laws.
2. Procedures for providing bank transaction data to tax authorities
Regarding the provision of transaction information through the account, account balance, and transaction data:
Commercial banks and other credit institutions shall provide transaction information, account balances, and transaction data upon request from the Director of the Tax Department for the purpose of inspection, verification, determination of tax obligations, and enforcement of administrative decisions on tax management as prescribed by tax law, within 10 working days from the date of receiving a written request from the tax authority. If commercial banks and other credit institutions fail to provide the data as requested by the tax authority, they will be subject to administrative penalties as stipulated in Article 19 of Government Decree No. 125/2020/ND-CP dated October 19, 2020, on administrative penalties for tax and invoice violations.
Regarding the declaration, deduction, and payment of tax obligations and the tracking of amounts transferred to foreign suppliers without a permanent establishment in Vietnam who conduct e-commerce or digital platform-based business with organizations and individuals in Vietnam (hereinafter referred to as foreign suppliers):
Commercial banks, other credit institutions, and payment intermediary service providers shall declare, deduct, pay, and monitor the amount transferred to overseas suppliers in accordance with the regulations in Article 81 of Circular No. 80/2021/TT-BTC dated September 29, 2021, of the Ministry of Finance. In cases where commercial banks, other credit institutions, and payment intermediary service providers fail to comply, they will be subject to penalties as stipulated in Clause 1, Article 144 of the Law on Tax Administration No. 38/2019/QH14 dated June 13, 2019.
3. How does the tax authority use information about bank transactions?
Tax authorities are responsible for maintaining the confidentiality of information and are fully accountable for its security in accordance with the Law on Tax Administration and relevant legal regulations.
Tax authorities use the bank transaction data of organizations and individuals to:
- To be used for inspection and verification purposes to determine tax obligations.
- Implement coercive measures to enforce administrative decisions on tax management in accordance with tax laws.
4. What should organizations and individuals do to prevent risks?
To mitigate risks and comply with regulations regarding the provision of data to tax authorities related to account transaction information, account balances, transaction figures, as well as the declaration, deduction, and payment of taxes payable, here are some tips for businesses:
- Understand the legal regulations: Familiarize yourself with the regulations and guidelines related to data provision, tax filing, and tax payment. Ensure you understand the procedures and any legal limitations and obligations you need to comply with.
- Data systematization: Establish and maintain a reliable financial, transaction, and tax management system. This will allow you to easily access the necessary information when requested by the tax authorities.
- Monitor closely: Ensure that you have accurately recorded information related to your bank account, transactions, and transaction data. Check regularly to ensure the accuracy of the data.
- Get ready for inspections and audits: Ensure that you have the necessary data and information ready to face any audits or inspections from the tax authorities.
- Keep relevant documents: Keep all tax and financial documents and records on file for the required period. This will help you demonstrate the accuracy and compliance of your information when needed.
- Collaborate with financial and tax experts: Collaborate with experienced financial and tax professionals or consulting firms to ensure you follow the correct procedures and comply with legal regulations.
Complying with regulations and following proper procedures not only helps you avoid legal risks but also contributes to the transparency and financial health of your business.
Implementing the above is not easy for businesses; the effective solution is to use professional services: Collaborate with financial, accounting, and tax experts to ensure you follow the correct procedures and comply with legal regulations.
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