Ms. Le Thu Huong, Deputy Director of the Ho Chi Minh City Tax Department, told the press that following a directive from the Ho Chi Minh City People's Committee in mid-May 2017 regarding strengthening tax management for e-commerce business activities in the city, the city's Tax Department began developing policies to review and collect outstanding taxes.
1. Here are six steps to combat tax evasion and recover unpaid taxes.
Step 1: Disseminate and publicize tax policies and the tax declaration and payment obligations of organizations and individuals engaged in e-commerce business activities.
Step 2: Search for and collect data.
Step 3: Process the collected data.
Step 4: Inspect and audit individuals and organizations engaged in e-commerce business activities.
Step 5: Publicly disclose tax evasion practices of individuals and organizations through mass media.
Step 6: Block websites that evade taxes, fail to file tax returns, or do not comply with penalties imposed by tax authorities.
Currently, the tax authorities have completed steps 1, 2, and 3 and are proceeding with step 4. As a result, they have discovered over 575 billion VND in undeclared taxes and have recovered over 19 billion VND.
Over 14.000 online business account holders have been summoned by the Ho Chi Minh City Tax Department for questioning. The department will forward information regarding online tax evasion to district/county tax offices within Ho Chi Minh City or other tax departments nationwide for timely processing. However, the agency is concerned that the large number of people summoned will create difficulties and reduce the effectiveness of the process.
2. Coordination from other regulatory agencies is needed to more effectively address tax evasion in online businesses.
Ms. Le Thu Huong stated that, in the short term, the tax sector needs to propose and recommend to the Prime Minister regulations requiring all organizations and individuals engaged in e-commerce to conduct payments through banks, prohibiting the use of cash. This will support efforts to combat tax evasion and achieve greater effectiveness, but it also requires significant cooperation from other relevant agencies in management.
Regarding e-commerce services provided by multinational corporations (services offered through Facebook, Google, online booking services, etc.), the Tax Department recommends that the State Bank of Vietnam issue regulations requiring all commercial banks to deduct contractor tax when making payments and transferring money abroad.
Going forward, to ensure transparency and fairness in fulfilling obligations to the State and to prevent tax evasion in online businesses, the Ho Chi Minh City Tax Department will continue to review banks to strengthen coordination mechanisms to help control the origin of money.
3. Coordinate with relevant agencies and departments to work together towards a common goal: preventing and collecting taxes correctly.
To elaborate further on this issue, speaking at a consultation workshop on the Law on Tax Administration organized by the General Department of Taxation in collaboration with the Vietnam Chamber of Commerce and Industry (VCCI) and the Vietnam Tax Consulting Association on August 7th, a leader from the Policy Department of the General Department of Taxation stated that this time, content related to tax management for e-commerce business activities has been added to the Draft Law on Tax Administration (amended), including: building a database and widely implementing electronic tax services such as online tax payment, electronic tax declaration, and electronic invoices…
In particular, this draft amendment to the Law also includes provisions on controlling payment activities. Specifically, commercial banks are obligated to deduct taxes arising from e-commerce transactions of foreign business organizations generating income in Vietnam.
This will provide the legal basis for the Ministry of Finance and the State Bank of Vietnam to issue specific guidelines to commercial banks as well as other relevant organizations and individuals for implementation.
Foreign businesses operating and generating income from Vietnam need to be more transparent in declaring and paying taxes to avoid tax evasion through online business activities, the Ho Chi Minh City Tax Department stated.
The Law on Tax Administration stipulates that organizations and individuals with income generated from social media platforms must declare and pay taxes to the direct tax authority. The tax authority will impose penalties according to the law on businesses that fail to fulfill their tax obligations. Therefore, during inspections and audits of individuals and organizations identified as engaging in tax evasion, or individuals who receive tax notices but intentionally fail to declare and pay taxes, the tax authority may transfer the case to the competent authority to request prosecution for tax evasion. www.expertis.vn
