Ho Chi Minh City People's Committee Vice Chairman Tran Vinh Tuyen directed the tax department to review more than 250.000 individual business households in the city. Based on this review, they should classify these households and businesses with large revenues that have long been paying taxes using the lump-sum method and purchasing invoice books from the tax authorities should be encouraged to convert into enterprises.
Mr. Tuyen believes this is an effective measure to address the unhealthy practice of tax officials "colluding" with businesses, meaning guiding them to pay the least amount of tax in order to profit from the difference.
"Deputy Prime Minister Vuong Dinh Hue also directed that the transformation must be implemented to avoid revenue losses and the loss of personnel," Mr. Tuyen said at a meeting with the Ho Chi Minh City Tax Department last week.
In addition, tax authorities must strengthen inspections of tax declarations and payments by individual business households, especially in the restaurant and eatery sectors. Currently, one inadequacy in management is that the management agency operates during office hours, while restaurants and eateries are often less busy at this time, so the effectiveness of inspections based on self-declared and self-paid information from business households is not high.
Mr. Le Xuan Duong, Deputy Director of the Ho Chi Minh City Tax Department, stated that individual business households constitute a large group of taxpayers, but their contribution to overall tax revenue is low. The tax authorities currently dedicate a significant amount of manpower to this operational task.
According to current regulations, businesses employing 10 or more workers must convert to a company.
In addition, since the beginning of 2016, according to Circular 92, households and individual businesses have also had to pay higher taxes, as in addition to the monthly lump-sum tax, they must also pay tax on each invoice used (previously, the lump-sum tax allowed for the use of certain invoices and revenue).
These are considered measures to encourage household and individual businesses to transform into enterprises.
However, in reality, the transformation in Ho Chi Minh City has been minimal. This is because business owners are reluctant to invest manpower and money in accounting, bookkeeping, or machinery and equipment.
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