Amending Law on Tax Administration: increase power for tax agents

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As of July, 2018, there were only 460 tax agents in operation with 1,124 tax agent staff. Photo: T.L.

Reduce barriers for enterprises

According to the Drafting Committee, Article 20 of the current Law on Tax Administration has stipulated the organizations providing services of tax procedures. However, because the scope as described is limited, the tax agents are only allowed to provide tax consultancy service, this does not encourage them to develop.

According to a report from the Vietnam Tax Consultancy Association, as of July 2018, there were only 460 tax agents in operation with 1,124 tax agent staff, while in fact there were 3,922 persons who were granted practicing certificates. Thus, it can be seen that the number of tax agent staff is lower than those who were granted the certificates (nearly 29%).

In addition, one of the reasons for failure for development of tax agent services in the past time is violation on providing service by the tax agents. According to the representatives of the General Department of Taxation, the current Law stipulates the scope of tax agent services as follow, the tax agents are allowed to carry out tax procedures but not allowed to provide the accounting service. Therefore, there are many shortcomings such as: Enterprises wanting to outsource accounting and tax declaration services, must hire two units at the same time, one unit provides the tax agent service and another provides the accounting service. This makes it difficult for enterprises, especially small enterprises and micro enterprises. On the other hand, there are enterprises that cannot afford to hire two separate services.

According to Mrs. Nguyen Thi Thuan, Director of Science Institute of Small and Medium Enterprise Management, one of the obstacles for why business households do not want to become enterprises is the increase in work load and expense.

"Having opened as an enterprise, business households must think of hiring employees specialized in tax and accounting, while if they operate as business households, they shall be guided by tax officers for calculation of tax payable every several months. This makes business households which are working well and have potentials for development, still be afraid of becoming enterprises,” Mrs. Thuan shared.

Speaking at a session on the revised Law on Tax Administration, Deputy Minister of Finance Tran Xuan Ha, Head of the Drafting Committee said that the Ministry of Finance is planning to develop its own accounting regime for small and micro enterprises with simple and easy accounting and booking system.

Those who are granted tax agent certificates are completely qualified to provide accounting service to small and micro enterprises. In addition, in order to encourage the development of the tax agent system and to facilitate and reduce costs for small and micro enterprises in compliance with accounting law, as well as tax law, it is necessary to expand the scope of service provision (accounting services) for tax agents.

Avoid conflict with the relevant laws

In order to give maximum support to small and medium enterprises, the draft Law on Tax Administration (amended) has supplemented the operational scope of tax agents, accordingly allowing them to provide accounting service to small and micro enterprises. In addition, in order to simplify administrative procedures and create favorable conditions for tax agents, the draft Law is amended towards stipulating "procedures for business registration of tax agent services" instead of “application for certificate of eligibility for tax service business".

At the same time, the amended draft Law on Tax Administration also stipulates that the Ministry of Finance shall be appointed to regulate the organization for examination and issuance of tax agent certificate, certificate of business registration for tax agents and to manage organizations providing tax agent service.

Regarding the amendments in the draft Law, most enterprises supported extending the operational scope of tax agents in the direction of adding the function of providing tax consultancy service and accounting service to small and micro enterprises.

According to Pham Sy Danh, Chairman of the Vietnam Association of Certified Public Accountants, the permission to an organization providing tax agent services to provide accounting service to small and micro enterprises in accordance with the accounting regime prescribed for this type of enterprise is necessary and suitable with the State's guideline (which have been concretized by law) on supporting small and medium enterprises.

"With this regulation, small and micro enterprises shall save on management and compliance costs because they do not have to hire two separate service providers at the same time to perform two separate services, but need only one provider for the both services. Thus, the units that are allowed to provide accounting service to the market are expanded and diversified and compete more strongly, thereby offering many options for small and micro enterprises of accounting service providers," Pham Sy Danh shared.

However, Mr. Danh also noted that the contents and regulations in the draft on conditions for the operation of accounting services should not be contradictory and conflict with the Accounting Law. At the same time, the guiding documents must also be consistent.

Commenting on the changes in the amended Law on Tax Administration relating to the function of tax agents, Nguyen Thi Cuc, Chairman of the Vietnam Tax Consultancy Association said that the supplementation of the function to provide accounting service to small and micro enterprises for tax agents will meet the practical needs of enterprises as well as development requirements of tax agents.

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"Actually, tax agents are now still implementing the accounting. If not, they will not be able to know the turnover, expenses, salaries, wages, depreciation of fixed assets to calculate the corporate income tax. Under the market mechanism, enterprises have the right to choose good and prestige accounting, auditing service providers and tax agents. Therefore, it is necessary to expand the scope of tax agent operation of tax and accounting service providers in order to raise the competitiveness and best serve the business community, especially small enterprises and super small," said Mrs. Cuc.