According to the new regulations, banks must provide customer account information upon request from the tax authorities. The crucial question is how the tax authorities will ensure the absolute confidentiality of this bank information and prevent its disclosure?
According to Decree 126/2020/ND-CP, which details certain provisions of the Law on Tax Administration and came into effect on December 5th, commercial banks are responsible for providing information about taxpayers' payment accounts opened at the bank to the tax authorities. This regulation has sparked much debate regarding customer data security.
Decree 126 stipulates that the State Bank of Vietnam (SBV), in coordination with the Ministry of Finance, shall direct and guide commercial banks, credit institutions, and licensed payment intermediary service providers in connecting and providing information to tax authorities regarding banking transactions of organizations and individuals; and cooperate with tax authorities in implementing tax enforcement measures. It is necessary to establish a mechanism for managing and supervising cross-border payment transactions in e-commerce, digital platform-based businesses, and other services with organizations and individuals in Vietnam.
Notably, the Decree stipulates that commercial banks are responsible for providing customer transaction information, account balances, and transaction data upon request from the head of the tax authority for the purpose of inspection and verification to determine tax obligations; and for implementing coercive measures to enforce administrative decisions on tax management as prescribed. The tax authority is responsible for maintaining the confidentiality of information and is fully responsible for its security in accordance with the Law on Tax Administration and relevant laws.
Commercial banks must also deduct and pay on behalf of foreign suppliers without a permanent establishment in Vietnam who conduct e-commerce or digital platform-based business with organizations and individuals in Vietnam... The bank must deduct money from the taxpayer's account to pay taxes, and freeze the account of the taxpayer subject to enforcement of administrative decisions on tax management at the request of the tax authorities.
Addressing concerns from many about whether the tax authorities have the capacity to receive and process data to determine taxpayers' income and obligations, as well as customer reluctance to disclose personal account information, the leader of a commercial bank in Ho Chi Minh City stated that when the tax authorities request taxpayer account information from banks, some customers may initially worry about their information being leaked. However, since the law stipulates that the tax authorities are responsible for maintaining confidentiality and using taxpayer account information only for tax audit purposes, the key is how this is implemented. Furthermore, the tax authorities can selectively choose taxpayers of particular interest before requesting bank information, avoiding a widespread request.
A leader from the Legal Department (State Bank of Vietnam) stated that the law already has regulations in place, so when the tax authorities request account information, commercial banks must comply. However, in reality, because bank account information is personal and the volume of data is enormous, the tax authorities need to be selective, requesting information based on specific groups of customers. If commercial banks provide all customer data, the tax authorities will not have the capacity to process and store it; consequently, the information could be leaked, affecting the privacy of taxpayers.
According to lawyer Nguyen Duc Nghia, Chairman of the Ho Chi Minh City Tax Agents Club, because bank accounts are related to cash flow, tax authorities need to limit requests for information, and issue criteria on who is entitled to request, receive, process, store, and secure information. Based on this, tax authorities can select accounts with unusual or suspicious transactions that may violate tax regulations to request information from banks in order to fulfill their revenue collection duties.
For example, the tax authorities only require banks to provide transaction data of account holders to determine income and tax obligations for revenue collection purposes, in order to avoid disclosing personal information. Regarding the account holder's information, tax officials have the right to request, receive, store, and maintain its confidentiality, and are legally responsible for this. How the information is kept confidential is the responsibility of the tax authorities, ensuring the account holder's information remains secure.
The deputy general director of a commercial bank commented: "From the perspective of customer information security, banks have always strictly adhered to confidentiality principles, even when requested by the tax authorities. However, providing customer information to a third party increases the risk of leakage, so the tax authorities must also strictly comply with confidentiality requirements."
One of the concerns of commercial banks and economic experts is that customers will switch to cash payments, including in the e-commerce sector, instead of the current cashless payment channels.
Economist Dr. Huynh Trung Minh analyzed that in other countries, the majority of customer cash inflows and outflows go through the banking system, making it easier for tax authorities to control and require customer information for tax collection. Meanwhile, in Vietnam, cash payments still account for a high proportion. Applying regulations requiring commercial banks to provide account numbers and transaction information could easily create anxiety, avoidance, and a shift back to cash payments, thus undermining the government's policy of encouraging cashless payments. "The regulation to manage and prevent tax evasion is correct, but it may not be appropriate at this time, so it needs to be implemented cautiously," Dr. Huynh Trung Minh suggested.
According to the deputy general director of a commercial bank, taxpayers are becoming increasingly accustomed to making payments through bank accounts. When banks provide their account information, the tax authorities can track the flow of funds and the source of income of account holders to determine their income and tax obligations. With the progressive regulations of Decree 126 and the interconnectedness between the tax and banking sectors, the crucial issue is for tax authorities to effectively fulfill their obligation to protect customers' bank account information, preventing the disclosure of personal data and ensuring law enforcement. Only by doing so can the implementation of the decree be guaranteed to be effective and efficient.
(Source: Thy Thơ – Thái Phương – Phương Nhung) Taxpayers fear their personal information will be leaked.(Nguoi Lao Dong Newspaper)
