Huge transaction value from mutant orchid: How does the Tax sector manage it?

the business transactions of mutant orchids (var orchid) Ngoc Son Cuoc worth VND250 billion that took place in Mao Khe, Dong Trieu, Quang Ninh. Source: Internet

Request taxpayers to register and declare

The business operation of mutant orchids increased because of transactions with huge values that could reach hundreds of billions of dong.

On March 15, the online community stirred up the business transactions of mutant orchids (var orchid) Ngoc Son Cuoc worth VND250 billion that took place in Mao Khe, Dong Trieu, Quang Ninh. In fact, this is not an unprecedented deal, because before that, many transactions of tens of billions of dong, and even hundreds of billions of dong, have been spread on media or social networks.

Many questions were raised about the tax management for this activity with the second "biggest" turnover today.

Recently, the Tax Department of Son La province issued a document requesting organisations and individuals that have transactions and trade in genetically modified orchids to register, declare and pay taxes to the tax authority. According to the Son La Tax Department, up to now, the Tax Department of Son La province, the Tax Branch of the districts and cities have not received applications for registration, declaration and tax payment for business operation of the mutant orchid.

In order to comply with the provisions of the Law on Tax Administration, tax policies and revenue loss prevention in the province, the Tax Department of Son La province requested organisations and individuals with transactions and trade in mutant orchids to register, declare and pay taxes with the tax authority. In case organisations and individuals do not register, declare and pay taxes but partake in transactions and trading of genetically modified orchids through inspection, they will be collected tax arrears and sanctioned in accordance with the current Law on tax.

Tax will be collected normally if there is business activity

In fact, the trade of mutant orchids has taken place from 2020. At that time, the General Department of Taxation gave many different instructions. At the same time, tax departments were requested to coordinate with competent authorites such as the police, market management and local authorities to verify cases. Or some tax authorities have also requested taxpayers to declare tax by documents or email.

According to Ms. Ta Thi Phuong Lan, Deputy Director of the Tax Administration Department of small, medium and business households, individuals - General Department of Taxation, the tax sector has not verified the official cash flow of sales of mutant orchids worth several billion VND up to several tens of billion VND that were mentioned online. Currently, the trading of bonsai and sale of ornamental plants (including mutant orchids) is being taxed by the management authority as with other types of business. If operating a business of mutant orchid, the tax office will collect tax as normal.

According to the current tax laws, farmers who grow and sell mutant orchids will not be subject to pay value added tax and personal income tax on their products.

But in case of operating business of mutant orchid for profit, they will be subject to tax payment. Specifically, if the business is trading orchids, it will be subject to value added tax and corporate income tax. If the taxpayer is an individual, he or she will be subject to value added tax and personal income tax.

Besides that, according to the General Department of Taxation, for every business activity arising, the tax authority will request taxpayers to declare and pay by themselves. In case the taxpayer does not self-declare, the tax authority will coordinate with competent authorities to determine these activities.

Facing many concerns about taxpayers engaged in the mutant orchid business, but they tried to avoid paying tax by claiming to self-grow the plants, the representative of the General Department of Taxation affirmed that this will be verified by professional operations of tax.

There are many ways to verify purchases or farming, for example by verification by local authorities or neighborhoods. Each case will have a different way to ensure taxpayers declare correctly and preventing tax loss.